how does the change in tax on a product influence the supply of that product ? explain

explain the determinants of demand and supply
:-)

  1. change in tax on a product directly influence the supply of that product. this changes can be:                      i) increase in tax: rise in tax leads to increase the cost of production and reduces profit margin as a result supply for that product falls. ii) decrease in tax : leads to falls in the cost of production and increases profit margin.
  2. determinants of demand
  • price of the commodity
  • price of related goods
  • income of the consumer
  • taste and preferences
  • future expectation
  • size and composition of population
determinants of supply are:
  • price of the commodity
  • price of other goods
  • price of factors of production
  • state of technology
  • taxation policy
  • number of firms
  • means of transportation and communication
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