Question

High taxes and/or heavy regulation:

a. can cause firms to boost production so they can cover the added costs.
b. are not likely to affect firms' behavior, since they are more concerned about profits than taxes or regulation .
c. raise costs of production so that the aggregate supply curve shifts to the left.
d. are likely to shift aggregate supply to the right.

Answer 1

Correct option is c.

That is heavy cost and high regulations raise cost of production so that the aggregate supply curve shifts to the left .

Step-by-step explanation:

Supply curse shifting towards left means there is decrease production efficiency .

• TAXES MEANS it is the compulsory monetary payment which later get contributed in the state revenue .
• REGULATIONS MEANS a set of rule which is maintained by a superior authority .