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6 August, 09:34

What is likely to happen to consumer and producer surplus when taxes increase on apple computers?

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  1. 6 August, 11:21
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    While the taxes increase the advertise price is above the balance, the quantity complete will be greater than the quantity demanded. The resulting surplus in the market will lead producers to cut back on manufacture and lower the price. As the price falls, the quantity demanded increases since consumers are willing to buy more of the creation at the lower price. In a competitive market, this procedure continues till the market reaches equilibrium. While a market may not be in equilibrium, the forces in the market move the market towards stability.
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