Question 10 (1 polnt) Graph A Graph B $5.50 30 $5.00 $420 Di Ds Dy 2. 40 50 The

Question

Question 10 (1 polnt) Graph A Graph B $5.50 30 $5.00 $420 Di Ds Dy 2. 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 squilibrium before the tax resented by the intersection of Di and S1. The shift in supply in Giraph A and the shift in demand in Ciraph B are the results of the taxes Which of the above graphs represents the impact on the market of an excise tax? Graph A Graph B Both A and B Niethèr graph represents an excise tax. Page 10

Explanation / Answer

Graph A is correct

Excise tax is imposed on sellers which increases cost of production. Higher cost of production reduces supply which shifts supply curve to the left as in graph A.

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