Refer to the Above Supply and Demand Graph of Product

question 141

Multiple Choice

Refer to the above supply and demand graph of Product X. What would happen if the government taxed the producers of this product because it has negative externalities in production?

• A) Supply would increase
• B) Demand would decrease
• C) Supply would decrease
• D) Price would increase

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Definitions:

Sensitivity

The quality of being easily influenced, changed, or damaged, especially by external factors or conditions.

Industry

The sector of an economy involved in the production of goods and services.

Inferiority

A feeling of lower standing in relation to others, which can affect an individual's self-esteem and social interactions.

Competence

Refers to having the necessary ability, knowledge, or skill to perform a task successfully.