Question

Suppose the government believes that there are too many cigarettes in the market. Which of the following policies could the government implement to decrease the supply of cigarettes
Subsidize tobacco farmers, thus lowering theTax the manufacturing of cigarettes price of tobacco Tax consumers on the purchase of cigarettes.
Tax the tobacco crop.

Answer 1

Answer:

d) tax the manufacturing of cigarettes

Explanation:

Taxation imposed by government on the manufacturing of a commodity increases the cost of production and shifts the supply curve of such commodity inward, that is to the left. When the government imposes tax on the manufacturing of cigarettes, the cost of producing cigarettes will increase and that will reduce the supply of cigarettes all things being equal.