Question -
Answer -
(i) A unit tax is a tax that the government imposes per unit sale of output.
(ii) For example, suppose that the unit tax imposed by the government is Rs 3.
Then, if the firm produces and sells 20 units of the goods, the total tax that the firm must pay to the government is 20 x 3 = 60.
(iii) So, if the unit tax increases, the firm’s cost of production increases which will shift the supply curve leftward.