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The answer to your query is supply and demand; if taxes go up, then (ceteris paribus) the supply curve shifts upward. It costs more money to make the same produ
by ddxxdd 6y ago
The answer to your query is supply and demand; if taxes go up, then (ceteris paribus) the supply curve shifts upward. It costs more money to make the same product, so either the price must go up, the quantity sold must go down, or some combination of the two.
In the case of a redistributional policy, that upward supply shift is matched with an upward demand shift, and prices will definitely rise to at least partially reverse the effects of the taxation-based redistribution.