When a Tax Is Imposed on Some Good,the Lost Consumer

question 112

Multiple Choice

When a tax is imposed on some good,the lost consumer surplus and producer surplus both typically end up as

• A) additional revenues for firms.
• B) lower prices for consumers.
• C) more units of output bought and sold.
• D) increased social welfare.
• E) tax revenue and deadweight loss.

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Definitions:

Perfectly Competitive Firm

A hypothetical business in a market where no single company can influence the market price or product quality, leading to an efficient allocation of resources.

Short Run

A period in economics during which at least one factor of production is fixed, limiting the ability to increase production in response to increased demand.

Profitable

A financial status where the income generated from business activities exceeds the expenses, taxes, and costs associated with maintaining the business.

Marginal Revenue

The additional revenue that a company earns from selling one more unit of a product or service.