When a Tax Is Imposed on Some Good,what Usually Happens

question 114

Multiple Choice

When a tax is imposed on some good,what usually happens to consumer and producer surplus?

• A) They both increase.
• B) They both fall to zero.
• C) They both decrease.
• D) Consumer surplus increases and producer surplus decreases.
• E) Consumer surplus decreases and producer surplus increases.

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Definitions:

Signaling Theory

A theoretical framework that explains how individuals or entities use certain signals or indicators to show their desirable qualities in various markets, including job and education markets.

Human-Capital Theory

An economic framework that suggests the accumulation of education, training, and health can improve workers' productivity and thus the economic output of a nation.

Human-Capital Theory

The concept suggesting that investing in education and training improves the productivity and efficiency of individuals, making them more valuable to employers and increasing their potential income.

Signaling View

A perspective in economics that suggests an action taken by a party can reveal or signal information about that party to other parties, often seen in contexts such as education and employment markets.