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From course:

Economics A Level (DONEEEEEEE)

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Question:

Simply Explain what happens in a Demand x Supply Diagram when a Tax or Subsidy is Applied

Author: eric_galvao



Answer:

-Taxes and Subsidies affect the Supply Curve. -The Supply Curve shifts Left if it's a Tax, Right if it is a Subsidy -The Market Price and Quantity Changes, resulting in a Contraction or Extension of Demand


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