Question

Refer to the diagrams for two separate product markets. Assume that society's optimal level of output in each market is Q0 and that government purposely shifts the market supply curve from S to S1 in diagram (a) on the left and from S to S2 in diagram (b) on the right. The shift of the supply curve from S to S2 in diagram (b) might be caused by a per-unit:

Group of answer choices

tax on the producers of this product.

tax on the buyers of this product.

subsidy paid to the producers of this product.

subsidy paid to the buyers of this product.

Answer 1

*Answer:

The shift of the supply curve from S to S1 in diagram (a) might be caused by a per unit:

A. tax on the producers of this product.

This is because, in diagram (a), supply curve shifted to the left. A supply curve will shifted to the left when there is tax on the products. This is because, when there is per unit tax on producers, then producers will get less price. Due to less price, producers reduce the supply of goods. As a resul supply curve shifted to the left.

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answered by: anonymous