Question

Government imposes GST on production of good . Explain its effects on supply of that good.​

Answer 1

Answer:

For higher prices the quantity supplied by all sellers in the market combined is greater than the quantity supplied for lower prices. When the government imposes tax on the production of a good then that increases the cost of production. Consequently, the firm will supply lesser units of output.

Answer 2

If government imposes tax on the production of goods then , this implies that the cost of production increases . Consequently , the firm will supply lesser units of outputs.

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