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Unformatted text preview: oduce and offer
to sell more output. In other words, the supply curve shifts to the right. Taxes
Some taxes increase the per-unit costs.
Suppose a shoe manufacturer must pay a $2
tax for each pair of shoes it produces. This
“extra cost” of doing business causes the
manufacturer to supply less output. (It is
similar to the price of a resource rising and
thus making it more expensive and less profitable for the producer to manufacture the
good. As a result, the producer produces less
output.) The supply curve shifts to the left. If
the tax is eliminated, the supply curve will
shift rightward to its original position. technology
The body of skills and
the use of resources in
The ability to produce
more output with a fixed
amount of resources.
The average cost of a
good. For example, if
$400,000 is spent to produce 100 cars, the average, or per-unit, cost is
$4,000. Section 2 The Supply Curve Shifts 119 05 (110-127) EMC Chap 05 11/17/05 4:51 PM Page 120 Subsidies
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This document was uploaded on 01/16/2014.
- Winter '14