Excise Tax Shifts Supply Curve Upward Steps: - Identify the tax type: A specific indirect tax of $1 per unit is an excise tax typically imposed on producers, increasing their marginal cost. - Analyze impact on supply: Higher costs mean producers supply less at each price, shifting the supply curve vertically upward by the tax amount. - Rule out demand shift: The tax does not change consumer preferences or income, so demand remains unaffected. - Confirm direction: Upward shift reflects the added cost per unit, reducing quantity supplied at every price level. Why C is correct: - By definition, a per-unit tax on sellers raises the supply curve vertically by$1, as it increases the minimum price needed to supply each quantity (standard microeconomic model of tax incidence). Why the others are wrong: - A: Demand shifts down only if the tax is directly on buyers, not producers; upward demand shift never occurs with taxes. - B: Downward supply shift would imply a subsidy, not a tax. - D: Demand shifts up with increased willingness to pay, unrelated to taxes; …