An increase in a excise tax imposed on wine producers is likely to result in

Question

BlackTom AI · Accepted Answer

An excise tax increases producers’ per‑unit cost, so the supply curve shifts left (upward) and the market moves to a higher price and lower quantity — i.e., a contraction along the demand curve.

1) Relevant concepts
- Supply curve shift vs. movement along a curve: a shift means the entire supply schedule changes at every price (usually due to cost changes); a movement along the demand curve means quantity demanded changes in response to a price change (no change in preferences).
- Excise tax on producers raises marginal cost per unit, reducing willingness to supply at the previous prices.

2) Step‑by‑step reasoning
- Suppose initial equilibrium (P0, Q0) satisfies demand D(P) and supply S(P).
- An excise tax t per bottle increases producers’ cost; to supply the same quantity they require a higher price received. The supply function effectively becomes S'(P) = S(P − t) (or equivalently the supply curve shifts left/up by t).
- Graphically, the supply curve shifts left. The new intersection with the unchanged demand curve occurs at a higher market price (P1 > P0) and a lower quantity (Q1 < Q0).

3) Intermediate relationship (algebraic view)
- Original equilibrium: D(P0) = S(P0).
- With tax: D(P1) = S(P1 − t). Because S(P − t) < S(P) for a given P, the intersection moves to lower Q and higher P.
- Tax incidence (how much consumers vs producers pay) depends on elasticities, but regardless, quantity falls.

4) Why the correct answer is correct
- The tax directly affects producers’ costs → supply shifts left.
- Because demand itself is unchanged, the decrease in quantity is a movement (contraction) along the existing demand curve rather than a demand shift.

5) Why other options are incorrect
- b: A tax does not shift demand to the right nor cause expansion along supply; demand changes require preference/income changes.
- c: Tax raises costs, so supply shifts left, not right; expansion along demand would imply quantity rises, which is opposite.
- d: A tax on producers does not shift the demand curve left; contraction occurs along demand due to higher price, not a demand shift.

Conclusion: The correct choice is a. a shift in the supply curve to the left and a contraction along the demand curve, which matches the provided answer.

An increase in a excise tax imposed on wine producers is likely to result in单项选择题

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