Supply Curve Shift Rightward

Steps:

• Quantity sold increased from 12,000 to 14,000 units at the same $1 price, with constant consumer tastes implying unchanged demand.
• Same price and higher quantity indicate a rightward shift in the supply curve.
• Identify supply shifters: lower production costs or taxes increase supply.
• Decrease in taxes on producers lowers costs, shifting supply right.

Why B is correct:

• A decrease in the tax rate on producers reduces production costs, shifting the supply curve rightward per the law of supply, allowing more units at the same price.

Why the others are wrong:

• A: Decrease in raw material prices also increases supply, but B specifically addresses taxes.
• C: Increase in tax rate raises costs, shifting supply leftward and reducing quantity at the same price.
• D: Monopoly formation restricts output, shifting supply leftward and decreasing quantity.

Final answer: B