The Tax on Gasoline

question 488

Multiple Choice

The tax on gasoline

• A)reduces efficiency by causing large deadweight losses.
• B)reduces efficiency by decreasing consumer surplus and producer surplus.
• C)enhances efficiency by serving as a corrective device in a market with positive externalities.
• D)enhances efficiency by serving as a corrective device in a market with negative externalities.

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Definitions:

Learning Curves

A phenomenon in which experience leads to learning meaning that current production lowers future costs.

Economies Of Scope

Cost advantages that enterprises obtain by producing a wide variety of products, rather than specializing in the production of a single product or a very few products.

Economies Of Scale

A situation where the cost per unit of output decreases as the scale of production increases.

Unit Costs

The cost incurred by a company to produce, store, and sell one unit of a particular product or service.