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Assume a market for a normal good is currently in equilibrium. If the government increases the taxes that firms must pay, then:
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Assume a market for a normal good is currently in equilibrium. If the government increases the taxes that firms must pay, then:

User Awj
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1 Answer

15 votes
15 votes

Answer:

The supply will decrease.

Step-by-step explanation:

The supply will decrease because the application of taxes will make selling costly. Thus, when cost increases then producers supply less. Therefore, less quantity will be supplied in the market when tax is imposed and this will increase the prices of products.

User Gaurav Shukla
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