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Question
When Paul listened to the presidential candidate debates, he heard one candidate proposing to increase taxes and the other candidate responding that this would cause firms to decrease production. How would this be described by an economist?
a. As taxes increase, there is a decrease in quantity supplied.
b. As taxes increase, there is an increase in quantity supplied.
c. As taxes increase, there is an increase in supply.
d. As taxes increase, there is a decrease in supply.
e. As taxes increase, there is an increase in supply and in quantity supplied.
Answer
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Related questions
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Suppose Solomon lives in a community with no price controls. What do you expect will happen if his town borders a community where there is a binding price ceiling on most products?
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