Question

After new research shows potentially damaging health effects of Good X, government leaders impose a new tax that firms must pay for each unit of the good produced. How will rational firms that produce the good likely respond?
A.by raising the price of the good
B. by lowering the price of the good
C. by decreasing production of the good
D. by increasing production of the good

Answer 1

Hello!
I do believe the answer is B.
Hopefully this helped :)
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