Suppose an Excise Tax of $1 Is Imposed on Every

question 60

Multiple Choice

Suppose an excise tax of $1 is imposed on every case of beer sold and sellers are responsible for paying this tax.How would the imposition of the tax be illustrated in a graph?

• A)The supply curve for cases of beer would shift to the right by $1.
• B)The supply curve for cases of beer would shift to the left by more than $1.
• C)The supply curve for cases of beer would shift to the left by less than $1.
• D)The supply curve for cases of beer would shift to the left by $1.

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Definitions:

Normal Good

A type of good for which demand increases when income increases, and falls when income decreases.

Income Rises

An increase in the amount of money received by individuals or entities, typically through wages, investments, or business activities.

Demand

The total quantity of goods or services that consumers are willing and able to purchase at a given price level.

Energy Drinks

Beverages containing stimulant compounds, usually caffeine, which are marketed as providing mental and physical stimulation.