As the Tax on a Good Increases from $1 Per

question 34

Multiple Choice

As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on,the

• A)tax revenue increases at first,but it eventually peaks and then decreases.
• B)deadweight loss increases at first,but it eventually peaks and then decreases.
• C)tax revenue always increases,and the deadweight loss always increases.
• D)tax revenue always decreases,and the deadweight loss always increases.

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Definitions:

Financial Obligation

A financial commitment, duty, or liability that an individual or entity is legally bound to fulfill, such as loans or debts.

Compounded Semi-annually

The process where interest is calculated twice a year and added to the principal, allowing future interest calculations to be based on the new principal amount.

Lump Sum Payment

A single payment made at a particular time, as opposed to a series of smaller payments or installments.

Economic Difference

Refers to the variation in economic performance, wealth, or resource distribution between different regions, sectors, or individuals.