10. A government taxes the production of cars. What is likely to decrease?A) The cost of supplying carsB) The price of carsC) The revenue for the governmentD) The supply of cars at every price
Question
- A government taxes the production of cars. What is likely to decrease?A) The cost of supplying carsB) The price of carsC) The revenue for the governmentD) The supply of cars at every price
Solution
D) The supply of cars at every price
Here's why:
-
When a government imposes a tax on the production of cars, it increases the cost of production for the manufacturers.
-
This increased cost of production is likely to discourage manufacturers from producing as many cars as they previously did, as their profit margins would be reduced.
-
As a result, the supply of cars at every price level is likely to decrease, as manufacturers would not be willing to supply the same quantity of cars at the same price as before the tax was imposed.
-
This decrease in supply could also lead to an increase in the price of cars, as the reduced supply meets the demand.
-
However, the revenue for the government could potentially increase, as they are now collecting taxes from the production of cars.
-
Therefore, the most likely to decrease is the supply of cars at every price.
Similar Questions
7 The following is a headline from the newspaper."Car drivers to pay higher taxes"What will result from an increased tax on cars?1 pointA increased employment in the car industryB increased petrol (gas) salesC reduced external costs of car useD reduced number of bus journeys
Consider the market for petrol. Which of the following changes would most likely lead to an increase in the demand for petrol? [Tick the best answer] Group of answer choices A decrease in the price of petrol cars. A decrease in the cost of public transport fares. An increase in income if private car travel is a normal good. Both a and b are correct. Both a and c are correct
Multiple Select QuestionSelect all that applyWhich of the following government policies may reduce the economic profits of a firm?Multiple select question.The imposition of a tariff on imported goodsAn increase in income taxes for individuals making more than $100,000 a yearThe removal of a tariff on imported goodsA regulation forcing firms to reduce their carbon output
An increase in taxes will ________ consumption spending and a decrease in transfer payments will ________ consumption spending. a. increase; decrease b. decrease; increase c. decrease; decrease d. increase; increase
Consider the market for petrol. Which of the following changes would most likely lead to a decrease in supply?Group of answer choices(a) An increase in the price of petrol cars.(b) The cost of oil refinery increases.(c) A war in Iraq damages over 600 oil wellsBoth b and c are correctNone of the options in this list.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.