Governments can cause the supply of a good to increase by:
A. raising taxes on the good.
B. warning companies that the good is dangerous.
C. lowering taxes on the good.
D. creating new regulations on the good.
Answer (2)
The correct answer is that governments can increase the supply of a good by lowering taxes on it, which reduces costs for producers and encourages higher production. Conversely, raising taxes or implementing regulations typically decreases supply. Thus, lowering taxes is a key strategy for increasing supply. ;
The correct answer is Option C: lowering taxes on the good, as this encourages producers to increase production by reducing their costs. Other options like raising taxes or creating new regulations typically lead to a decrease in supply. Lower taxes allow producers to retain more revenue and incentivize higher production.
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