Refer to the Graph Shown

question 89

Multiple Choice

Refer to the graph shown. Assume the market is initially in equilibrium at point b in the graph but the imposition of a per-unit tax on this product shifts the supply curve up from S₀ to S₁. The effect of the tax is to raise equilibrium price from:

• A)P₁ to P₁ + t.
• B)P₁ to P₂.
• C)P₂ − t to P₂.
• D)P₂ − t to P₁ + t.

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