When the Government Imposes a Specific Tax Per Unit on a Product

question 126

Multiple Choice

When the government imposes a specific tax per unit on a product, changes in consumer surplus are ________ and changes in producer surplus are ________.

• A) negative; positive
• B) positive; positive
• C) negative; negative
• D) positive; negative

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Definitions:

Profit Margin

Profit Margin indicates the percentage of revenue that remains as profit after all expenses are deducted, showcasing a company's efficiency in generating profit from sales.

Net Income

Net income is the total profit of a company after all expenses, taxes, and costs have been deducted from its total revenue.

Exchange Rate

The value of one currency for the purpose of conversion to another, affecting international trade and investments.

Gain

The financial profit obtained when the selling price of an asset exceeds its purchase price.