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When an excise tax is imposed on buyers, this will cause the ________ curve to shift __________.1 pointsupply; up and to the left.demand; rightward.supply; down and to the right.demand; leftward.

Question

When an excise tax is imposed on buyers, this will cause the ________ curve to shift __________.1 pointsupply; up and to the left.demand; rightward.supply; down and to the right.demand; leftward.

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Solution

When an excise tax is imposed on buyers, this will cause the demand curve to shift leftward.

Here's why:

  1. An excise tax is a tax on a specific good or service. When this tax is imposed on buyers, it increases the price that buyers effectively pay for the good or service.

  2. The law of demand states that, all else being equal, as the price of a good or service increases, the quantity demanded decreases.

  3. Therefore, when buyers have to pay more for a good or service due to an excise tax, they will demand less of it.

  4. This decrease in quantity demanded at each price level is represented graphically by a leftward shift of the demand curve.

So, the correct answer is "demand; leftward."

This problem has been solved

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