When a tax is imposed on the sellers of a good,the
A)demand curve shifts downward by less than the amount of the tax.
B)demand curve shifts downward by the amount of the tax.
C)supply curve shifts upward by less than the amount of the tax.
D)supply curve shifts upward by the amount of the tax.

Question

Quizplus · Accepted Answer

When a tax is imposed on the sellers of a good, the supply curve shifts upward by the amount of the tax. The reason for this is that the tax increases the cost of production for the seller, so they need to receive a higher price to cover their costs and maintain their desired level of profit. As a result, the equilibrium price increases and the quantity of the good demanded decreases, which is shown by a movement along the demand curve. Therefore, the answer is D, as the supply curve shifts upward by the amount of the tax.

When a Tax Is Imposed on the Sellers of a Good,the