In the supply and demand framework, when a tax is imposed on sellers of a product, which curve shifts and in what direction?

Show Answers

The demand curve shifts downward by the amount of the tax per unit.The supply curve shifts downward by the tax amount per unit.The demand curve shifts upward by the tax amount per unit.The supply curve shifts upward by the tax amount per unit.None of the above.

Explanation

When a tax is levied on sellers, it increases their costs, which causes the supply curve to shift upward (or to the left) by the amount of the tax per unit. This reflects a higher price sellers require to supply the same quantity.