How do you calculate the new supply curve after adding a tax on products?

How do you calculate the new supply curve after adding a tax on products?

To calculate the new supply curve after adding a tax on products, you would first need to determine the amount of the tax and the price elasticity of supply for the product. The price elasticity of supply measures how responsive the quantity supplied is to changes in price. If the elasticity of supply is high, the quantity supplied will change significantly in response to small changes in price, while if it is low, the quantity supplied will change relatively little in response to changes in price.

Once you have determined the elasticity of supply, you can use the following formula to calculate the new supply curve:

New Quantity Supplied = Original Quantity Supplied - (Elasticity of Supply * Tax)

This formula assumes that the tax is passed on to consumers in the form of higher prices. If the elasticity of supply is high, the new quantity supplied will decrease significantly in response to the tax, while if it is low, the new quantity supplied will change relatively little.

The new supply curve would then be represented by the new quantity supplied plotted against the price, with a shift to the left due to the imposition of tax.