1. Do cost of Production affect demand or supply? Explain answer (long answer)
2. Will there be a shift or movement along supply? Explain answer (long answer)
3. Explain what happen to price and supply.

20.) Define what economists mean by the term interest rate. The interest rate is the annual interest payment on a loan expressed as a percentage of the loan. Equal to the amount of interest received per year divided by the amount of the loan. Case Study Let us assume we have a product with the situation shown in the graph below. The price is $1.00 per unit. Prices Supply~ 1.00 Demands Quantity, Now a sales tax is imposed. The tax is charged to the seller. For every $1.00 of sales, assume that the seller must pay $0.07 to the government. Customers have not paid any sales tax money to any government agency. The store pays the sales tax to the government.) From the point of view of the seller, this is an additional cost of production. In addition to all other costs, the seller must also pay the sales tax. Question: 1. Do costs of production affect demand or supply? Explain your answer. 2. Will there be a shift or movement along supply? Explain what happen to price and supply