Question

A $5 tax levied on the buyers of pants will cause the_______

a. supply curve for pants to shift down by $5.
b. supply curve for pants to shift up by $5.
c. demand curve for pants to shift down by $5.
d. demand curve for pants to shift up by $5.

Answer 1

Option c. the demand curve for pants to shift down by $5.

Step-by-step explanation:

Option C is the correct answer because tax levied on the buyer will increase the price of pants. Thus, as per the law of demand or law of demand states that there is an opposite relationship between the price of commodity and quantity demanded. The levied tax on the buyer will induce the buyer to demand less. Consequently, the demand curve shift downward.