Question

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:

A. demand curve for cigarettes rightward.
B. demand curve for cigarettes leftward.
C. supply curve for cigarettes rightward.
D. supply curve for cigarettes leftward.

Answer 1

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the supply curve for cigarettes leftward.

Step-by-step explanation:

An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the supply curve for cigarettes leftward. When the tax on cigarettes increases, it raises the cost of production for cigarette manufacturers. As a result, they supply fewer cigarettes at each price level, leading to a leftward shift in the supply curve.