If the Government Levies an Excise Tax in a Market

question 225

Multiple Choice

If the government levies an excise tax in a market whose demand curve is perfectly inelastic,the burden of the tax will fall completely on the _____,and the deadweight loss will equal _____.

• A)consumers;zero
• B)producers;zero
• C)consumers;the tax revenue
• D)producers;the tax revenue

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Definitions:

Union Labor

Workforce that is organized in trade unions which negotiate wages, working conditions, and benefits on their behalf.

Production Process

The production process involves the steps, operations, and methodologies utilized to transform raw materials and components into finished goods or services.

Market Conditions

The various factors that influence the supply and demand of goods and services, including prices, competition, and overall economic climate.

Elastic Demand

A situation where the quantity demanded of a product or service changes significantly when its price changes.