How does a change in per unit tax influence the supply of good? Explain.
Dear Student
On supply, Excise Tax is the one which affects the supply of a good. Excise Tax is a tax on the production of goods & Services. It is levied per unit of production of firm. It raises marginal & average costs of the producer. In such situations, producer will be willing to sell less at the existing price, or may choose to sell same quantity at the higher price.
This implies the situation of decrease in supply or backward shift in supply curve and vice versa.
Regards
On supply, Excise Tax is the one which affects the supply of a good. Excise Tax is a tax on the production of goods & Services. It is levied per unit of production of firm. It raises marginal & average costs of the producer. In such situations, producer will be willing to sell less at the existing price, or may choose to sell same quantity at the higher price.
This implies the situation of decrease in supply or backward shift in supply curve and vice versa.
Regards