Question

In Great​ Britain, raising taxes on gasoline has increased the costs of supplying gasoline. As a​ result, the equilibrium quantity of gasoline​ ________ and the equilibrium price of gasoline​ ________.

Answer 1

Raising taxes on gasoline in Great Britain leads to a decrease in the equilibrium quantity of gasoline and an increase in the equilibrium price.

Step-by-step explanation:

When taxes on gasoline are increased in Great Britain, the costs of supplying gasoline also increase. As a result, the equilibrium quantity of gasoline decreases and the equilibrium price of gasoline increases.

Higher taxes on gasoline lead to a decrease in the quantity supplied, as it becomes less profitable for gasoline producers to expand their output. This decrease in supply causes the equilibrium quantity of gasoline to decrease. Additionally, the increase in taxes also affects consumers' behavior, leading to a decrease in the quantity demanded, further contributing to the decrease in equilibrium quantity.

On the other hand, the increase in costs of supplying gasoline due to higher taxes leads to an increase in the equilibrium price of gasoline. Producers pass on the additional costs to consumers, resulting in a higher price of gasoline.