A government official proposes taxing producers of plastic grocery bags at 10 cents per plastic bag. What effect would the tax have on the market for grocery bags? (1 point)

Question

A government official proposes taxing producers of plastic grocery bags at 10 cents per plastic bag. What effect would the tax have on the market for grocery bags? (1 point)
Responses

supply would decrease 
supply would decrease

demand would decrease 
demand would decrease

supply would increase

GPT-4o mini · Answer

The correct response is: **supply would decrease** When a tax is imposed on producers, it increases their costs of production. As a result, producers are likely to supply fewer plastic grocery bags at any given price, leading to a decrease in supply. This may also result in an increase in the price of plastic grocery bags for consumers, as producers may pass some of the tax burden onto them.