How does the imposition of a unit tax affect the supply curve of a firm?
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How does the imposition of a unit tax affect the supply curve of a firm?
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A unit tax is the tax imposed by using the government on according to unit of the output bought. because of the imposition of unit tax, the value of production according to unit of output will increase, which ultimately increases the marginal cost? therefore, the LMC curve will shift leftward upward and because the deliver curve is a portion of LMC, so the deliver curve may even shift leftward upward.

 Let us apprehend the impact of imposition of unit tax via an instance. assume that a company is facing the rate OP1. LAC1 and LMC1 are the long term average value curve and long term marginal price curve respectively. also anticipate that the authorities has imposed a unit tax of Rs in line with unit of output produced. Now, this could increase the firm's LAC and LMC, because the firm desires to pay Rs ok extra on every output produced. LMC1 and LAC1 will shift leftward upwards to LMC2 and LAC2. The significance of shift is equal to Rs k. as the deliver curve is part of LMC, it's going to additionally shift leftward from S1 to S2, because of the imposition of the tax. consequently, the firm will now supply lesser devices of output.
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