Define an Excise Tax and Give Three Examples

question 27

Essay

Define an excise tax and give three examples. Explain the relationship between a tariff and an excise tax. Use supply and demand analysis to explain why the equilibrium price of apples will rise and the equilibrium quantity will fall if an excise tax is levied on apples. Explain why the price of apples will not rise by the full amount of the tax.

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Definitions:

Want

A desire for goods or services that are not necessary for basic survival but are perceived as desirable.

Utility

In economics, refers to the total satisfaction received from consuming a good or service.

Satisfaction

The fulfillment or gratification of a desire, need, or appetite.

Green Beans

Edible green pods from certain cultivars of the common bean, often consumed cooked as a vegetable.