thirds of the wheat and rice in low-income countries around the world used these Green Revolution seeds—and

the harvest was twice as high per acre. A technological improvement that reduces costs of production will shift

supply to the right, so that a greater quantity will be produced at any given price.

Government policies can affect the cost of production and the supply curve through taxes, regulations, and

subsidies. For example, the U.S. government imposes a tax on alcoholic beverages that collects about $8 billion

per year from producers. Businesses treat taxes as costs. Higher costs decrease supply for the reasons we

discussed above. Other examples of policy that can affect cost are the wide array of government regulations

that require firms to spend money to provide a cleaner environment or a safer workplace. Complying with

regulations increases costs.

A government subsidy, on the other hand, is the opposite of a tax. A subsidy occurs when the government pays
{"uploaded_via": "batch_uploader", "file_type": ".pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "producer": "Prince 14.2 (www.princexml.com)", "title": "Principles of Microeconomics 3e", "creator": "PDFMiner", "batch_upload": true, "file_name": "Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "file_size_mb": 26.99, "total_pages": 597, "upload_timestamp": "2026-02-07T15:37:44.339247", "source": "downloads\\business\\economics\\Microeconomics3e.pdf"}