Question

According to the Food and Drug Administration, "...the ultraviolet (UV) radiation from these devices [sunlamps and tanning beds] poses serious health risks." As a result of reading this, the local mayor decides to introduce legislation that will put a 10% excise tax on tanning consumers. From an economic point of view, this will
A. shift the demand curve rightward for tanning.B. shift the demand curve leftward for tanning.C. shift the supply curve rightward for tanning.D. move down along the demand curve for tanning.

Answer 1

Answer:

B

Explanation:

Because the tax was imposed to tanning consumers, the demand will be affected and not the supply ( because the tax was not imposed for producers). With the new tax, the price of using tanning beds will increase. This will lead to a decrease in demand because less people are willing to pay the extra imposed by the tax. In the demand and supply graph for the tanning beds market, the demand curve will shift to the left.