Q. 145.0( 1 Vote )

Examine the effec

Answer :

A) Fall in the own price of good X:


● The effect of fall in the own price of Good X is mentioned below.


● The fall in the own price reduces the supply of good X.


● The producer moves along the same curve S from A to B.


● When the price falls from P1 to P2.


● The supply falls from Q1 TO Q2.



B) The rise in the tax rate on good X


● The effect of the rise in the tax rate on good X is mentioned below:


● The rise in the tax rate increases the cost of goods.


● The supply falls.


● The supply curve shifts from S1 to S.


● Price remains the same as OP.


● The quantity supplied falls from Q1 TO Q2.



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