Suppose There Is a Tax of $50 on Bicycles

question 181

Multiple Choice

Suppose there is a tax of $50 on bicycles. The supply curve for bicycles slopes upward. The demand curve for bicycles slopes downward. Sellers are required by law to pay the tax. If the tax is reduced from $50 to $10 per bicycle, then the:

• A) supply curve will shift downward by $40.
• B) demand curve will shift downward by $40.
• C) demand curve will shift upward by $40.
• D) supply curve will shift upward by $40.

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