Other Things Equal, an Excise Tax on a Product Will

question 356

Multiple Choice

Other things equal, an excise tax on a product will

• A) increase its supply.
• B) increase its price.
• C) increase the quantity sold.
• D) increase its demand.

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Definitions:

Specific Tax

A fixed amount imposed by the government on a product, service, or activity.

Price Elasticity

A measure that shows how much the quantity demanded of a good responds to a change in the price of that good.

Tax Borne

Refers to the entity (consumers, producers, or others) that ultimately pays the economic cost of a tax, regardless of who the tax is initially levied upon.

Subsidy Program

A government initiative designed to support businesses or individuals through financial assistance or tax benefits.