Draw the graph · Micro · Supply and demand
A per-unit tax on soda
Drag a curve sideways, or use its arrows. A curve you do not move is a curve you are saying stays put. Make each shift clear enough that a reader could see it.
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Demand stays put. Supply shifts left.
The tax is collected from sellers, so it raises what they must receive to offer any given quantity. At every price buyers pay, sellers now keep less, so they offer fewer cans. The supply curve shifts left, which is the same as shifting it up by the size of the tax. Demand does not move. Buyers respond to the higher price by sliding along their demand curve.
Price rises by less than the tax and quantity falls.
Common mistake. Students often shift demand left because 'people buy less soda.' They buy less because the tax raised the price, which is a movement along demand. The curve that shifts is supply.
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