Consumer Surplus

question 12

Multiple Choice

Consumer surplus

• A)will definitely be low for inexpensive goods.
• B)will definitely be high for inexpensive goods.
• C)will definitely be low for expensive goods.
• D)will definitely be high for expensive goods.
• E)may be low or high for any type of good, expensive or inexpensive, depending on the characteristics of demand.

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Definitions:

Personal Income Tax

A tax levied on the income of individuals, which can vary based on income levels and types of income.

State Excise Tax

Taxes imposed by a state on particular goods or activities, such as alcohol, cigarettes, and gasoline.

Federal Excise Tax

A tax imposed by the federal government on the sale of certain goods and services, such as gasoline, alcohol, and tobacco.

Efficiency Loss

The loss of economic efficiency that can occur when the balance between supply and demand is not achieved or when market conditions lead to a misallocation of resources.