If the supply of a product is upsloping and demand is downsloping, an excise tax of $2 per unit will increase price by

A) more than $2.
B) $2.
C) less than $2 and increase equilibrium output.
D) less than $2 and reduce equilibrium output.

Question

Brynn Chase · Accepted Answer

Final Answer : D, Explanation :  An excise tax increases the cost of producing or selling a product, shifting the supply curve to the left. This typically results in a higher equilibrium price and lower equilibrium quantity, meaning the price increase is less than the tax amount and output is reduced.

If the supply of a product is upsloping and demand is downsloping, an excise tax of $2 per unit will increase price by

A) more than $2.
B) $2.
C) less than $2 and increase equilibrium output.
D) less than $2 and reduce equilibrium output.

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Learning Objectives

Learning Objectives

Related questions

If the supply of a product is upsloping and demand is downsloping, an excise tax of $2 per unit will increase price byA) more than $2.B) $2.C) less than $2 and increase equilibrium output.D) less than $2 and reduce equilibrium output.

Definitions

Learning Objectives

Learning Objectives

Related questions

If the supply of a product is upsloping and demand is downsloping, an excise tax of $2 per unit will increase price by

A) more than $2.
B) $2.
C) less than $2 and increase equilibrium output.
D) less than $2 and reduce equilibrium output.