A Tax on Apples Would Cause Consumers to Suffer Because

question 4

Multiple Choice

A tax on apples would cause consumers to suffer because

• A) consumer surplus would increase.
• B) the price of apples would increase and fewer apples would be purchased.
• C) revenues for apple growers would decrease.
• D) the government would collect revenue from the tax.
• E) producer surplus would decrease.

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Definitions:

Negative Net Present Value

A financial metric indicating that the present value of cash inflows is less than the present value of cash outflows, suggesting the investment is not financially viable.

Initial Cost

The upfront expense incurred to purchase an asset or to initiate a project.

Net Present Value

A calculation that compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account.

Required Rate

The minimum return an investor expects to achieve when investing in a particular asset or project.