When the Imposition of an Excise Tax Causes the Quantity

question 2

Essay

When the imposition of an excise tax causes the quantity demanded and quantity supplied to decrease, this will result in:
A.deadweight loss.
B.increases in producer surplus.
C.increases in consumer surplus.
D.increases in both consumer and producer surplus.

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Definitions:

Fine

A monetary penalty imposed by a court on an individual or entity as punishment for a violation or crime.

Fixed Costs

Expenses that do not change in the short term regardless of the level of production or output.

Capital Expenditure

Capital expenditure involves funds spent by a company to acquire or upgrade physical assets such as equipment, property, or industrial buildings.

Wages

Payments made to employees based on the amount of time worked or the level of output produced.