The impact of the Federal taxes on the supply curve of the good taxed.
Concept Introduction:
Supply curve- The supply curve abides by the law of supply establishing a direct relationship between the
The following graph illustrates the market for a product where the market interaction of demand and supply determine the
The leftward shift in the supply is equal to the amount of tax imposed as shown above. This is because for each unit of the output the tax is added to the price. The new equilibrium is established at a higher price and a lower quantity bought and sold. The higher prices are shared among the buyers and sellers depending upon the
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