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Which regulatory policy shifts the supply curve upwards?Group of answer choicesPrice floorPrice capAd valorem tax to be paid by the consumersAd valorem tax to be paid by the producersSpecific tax to be paid by the consumersSpecific tax to be paid by the producers

Question

Which regulatory policy shifts the supply curve upwards?Group of answer choicesPrice floorPrice capAd valorem tax to be paid by the consumersAd valorem tax to be paid by the producersSpecific tax to be paid by the consumersSpecific tax to be paid by the producers

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Solution

The regulatory policies that shift the supply curve upwards are:

  1. Ad valorem tax to be paid by the producers: This is a tax that is based on the value of a good or service. When this tax is imposed on producers, it increases their cost of production. This causes the supply curve to shift upwards because producers are less willing to supply the same quantity at the same price.

  2. Specific tax to be paid by the producers: This is a tax that is a fixed amount per unit of a good or service. Similar to the ad valorem tax, when this tax is imposed on producers, it increases their cost of production. This also causes the supply curve to shift upwards.

Price floors and price caps do not shift the supply curve. They are price controls that set a minimum or maximum price that can be charged for a good or service. They affect the quantity supplied but do not shift the supply curve.

Ad valorem tax and specific tax to be paid by the consumers do not shift the supply curve either. These taxes increase the price that consumers have to pay, but they do not affect the cost of production for producers. Therefore, they do not shift the supply curve.

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