Question

In 1993, the government increased the tax on gasoline producers from 14.1 cents per gallon to 18.4 cents per gallon. Our model of supply and demand predicts that:_____a. the demand for gasoline decreased. b. the supply for gasoline increased. c. the demand for gasoline increased. d. the supply for gasoline decreased. e. both the supply and demand for gasoline decreased.

Answer 1

In 1993, the government increased the tax on gasoline producers from 14.1 cents per gallon to 18.4 cents per gallon. Our model of supply and demand predicts that

both the supply and demand for gasoline decreased.

Step-by-step explanation:

The reason why both supply and demand will be decreased is a result in the increase of tax which will have direct effect on the price i.e the price will increase as result of tax increment and this will affect the rate at which the gasoline will be demanded for, hence; affects the supply rate as little quantity will be made available for sales.