Answered

4. How would a new excise tax affect the supply curve?

A. The effect cannot be determined without knowing the amount of the tax.
B. It would not change the supply curve, because it would only move the price.
C. It would probably cause the supply curve to shift to the left.
D. It would probably cause the supply curve to shift to the right.



Answer :

GinnyAnswer

Final answer:

Imposing a tax on the supplier or the buyer has the same effect on prices and quantity. In a market with a perfectly inelastic supply curve, an excise tax leads to a price increase for consumers without affecting the quantity bought and sold.


Explanation:

Imposing a tax on the supplier or the buyer has the same effect on prices and quantity. In a market where the supply curve is perfectly inelastic, an excise tax would result in a price increase for consumers with no change in the quantity bought and sold.


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