Question

An excise tax collected from the producers of a good
A. Shifts the supply curve upward
B. Creates a loss of revenue
C. Has a similar effect as a tax subsidy
D. Shifts the supply curve downward

Answer 1

Normally, a tax simply changes the price, with the burden falling on the party with the more inelastic curve. However, the wording of this question states the tax is "collected from the producers of a good." With that in mind, I would consider what happens when costs to the producer go up.

Answer 2

An excise tax collected from the producers of good would increase their cost of production so (A) would be incorrect as well as (C) would be incorrect. B would be correct in that case if the burden falls on the producer (mostly the case when the demand for their goods is elastic)
D would be correct as this tax would increase their cost of production hence the supply curve would shift downward.

Answer 3

D