ollins: Attempt 1 Graph A Graph B St $5.50 $31.00 s5.00 $450 Di Di Da 0 S0 40 50
ID: 1152226 • Letter: O
Question
ollins: Attempt 1 Graph A Graph B St $5.50 $31.00 s5.00 $450 Di Di Da 0 S0 40 50 The two graphs above show the impact on a market from the imposition of a tax. One graph represents the impact of a sales tax. The other graph represents the impact of an excise tax. The equilibrium before the tax is represented by the intersection of D, and S The shift in supply in Graph A and the shift in demand in Graph B are the results of the taxes Which of the above graphs represents the impact on the market of a sales tax? O Graph A Graph D Both A and BExplanation / Answer
When a tax is imposed by the federal government due to that the price of the commodity increases. It happens because the firm needs to pay more for the products they use such as office equipment, machinery etc. This increases the cost of doing business and hence the price of new output. Thus, the supply curve shifts to its left.
Sales tax affects the supply curve directly, it has only an indirect impact on demand. Hence graph B does not represent the impact of Sales tax.
Thus graph A represents the impact on the market of a sales tax.
Answer Graph A.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.