Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

a. demand curve will shift upward by $20, and the effective price received by sellers will increase by $20.

b. demand curve will shift upward by $20, and the effective price received by sellers will increase by less than $20.

c. supply curve will shift downward by $20, and the price paid by buyers will decrease by $20.

d. supply curve will shift downward by $20, and the price paid by buyers will decrease by less than $20.

Answer rating: 100% (QA)

When the taxes has been reduced to 20 than the demand curve will shift upward by 20 ... View the full answer