Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 6 - Part II - Supply, Demand, and Government Policies - Quick Check Multiple Choice - Page 130: 5

Answer

(d) The repeal of a tax levied on producers

Work Step by Step

When a producer tax is repealed this lowers production cost and, in response, quantity supplied increases. Additionally, the burden of tax is shared between producer and consumer which means that the decrease in price associated with lower producer taxes is also conferred to the customer, this lower price, in turn, increases the quantity demanded.
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