ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -When there is an increase in unit tax on the production of goods by the government, the unit cost of production will rise and consequently, the firm would supply less than before at the given price. The supply would decrease implying that the supply curve would shift to the left.

Detailed explanation-2: -Due to the imposition of unit tax, the cost of production per unit of output increases, which ultimately increases the marginal cost. Consequently, the LMC curve will shift leftward upward and as the supply curve is a portion of LMC, so the supply curve will also shift leftward upward.

Detailed explanation-3: -When the government imposes a tax on the production of goods, marginal and average cost of the production tend to rise. Other things remaining constant, it causes a cut in profits. Accordingly, producers will supply less of the good at the existing price, or they will sell the same quantity only at a higher price.

Detailed explanation-4: -Supply is generally considered to slope upward: as the price rises, suppliers are willing to produce more. Demand is generally considered to slope downward: at higher prices, consumers buy less.

Detailed explanation-5: -Factors such as taxes and government regulation, the market power of suppliers, the availability of substitute goods, and economic cycles can all shift the supply or demand curves or alter their shapes.