ECC1000 Study Guide - Demand Curve, Economic Equilibrium, Autarky

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26 Nov 2013
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When tax of is imposed on buyers, the buyers now have to pay extra to acquire the same amount of goods and hence the demand curve due to increase in price shifts to the left. The quantity demanded now decreases due to increase in price. When tax of is imposed on sellers, the sellers now have to pay extra to produce the same amount of goods and hence the supply curve due to increase in cost shifts to the left. The quantity supplied now decreases due to increase in cost. When subsidy of is given to buyers, the buyers now have to pay less to acquire the same amount of goods and hence the demand curve due to fall in price shifts to the right. The quantity demanded now increases due to decrease in price.

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