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Question

A tax levied on the sellers of a good shifts the

• A) supply curve upward (or to the left).

• B) supply curve downward (or to the right).

C) demand curve upward (or to the right).

• D) demand curve downward (or to the left).

Answer

D) demand curve downward (or to the left).

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A tax levied on the sellers of a good shifts the demand curve downward (or to the left). This is because the tax increases the cost of production...