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The government is considering levying a tax of $30 per unit on suppliers of either jeans or allergy medication. The supply curve for each of these two
goods is identical, as you can see on each of the following graphs. The demand for jeans is shown by D, (on the first graph), and the demand for
allergy medication is shown by D. (on the second graph).
Suppose the government taxes jeans. The following graph shows the annual supply and demand for this good. It also shows the supply curve (
S + Tax) shifted up by the amount of the proposed tax ($30 per pair).
On the following graph, use the green rectangle (triangle symbols) to shade the area that represents tax revenue for jeans. Then use the black
triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax.

Respuesta :

The effect of tax on supply is that it increases the cost of production and ultimately the price of the Jeans. This will have the effect of reducing the demand as seen in the graph attached.

What are the effects of Tax of Supply?

All things being equal, Tax has a way of reducing supply in the long run, especially in a perfect market.

When taxes are levied on the production of a product that is elastic to price changes (that is changes easily with fluctuations in price according to the laws of demand), demand slows down.

When demand slows down, profit also slows down. This in turn bites back on the amount of taxes that the government is able to make because suppliers are are driven by profit.

See the link below for more about the effects of tax on supply:

https://brainly.com/question/12129843


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