In other words the supply curve shifts to the right

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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 knowledge concerning the use of resources in production. advancement in technology The ability to produce more output with a fixed amount of resources. per-unit cost 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 Subsidies h...
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