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Increasing access to medicines 179
Figure 2 Effect of taxes and tariffs on demand for
medicines
P
S1
S
P + tariff
P
Qtariff
Q
Q
If a government imposes a tax on a medicine, this raises the
minimum price artificially. Figure 2 shows the effect of adding such
a tax; the supply curve is effectively shifted inwards because suppliers
must now add the tax to the amount that they charge. As a
result, the amount supplied falls from Q 0 to Q tariff .