A Major Advantage of a Sales Tax Is That It

question 41

Multiple Choice

A major advantage of a sales tax is that it

• A) tends to place a relatively greater burden on high-income individuals who have more money to spend.
• B) cannot be shifted.
• C) provides a high yield with relatively low collection costs.
• D) has little or no effect on the final prices consumers pay.
• E) does not affect the overall level of retail sales.

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Definitions:

Marginal Utility

The extra benefit or utility gained from acquiring or consuming an additional unit of a product or service.

Utility Per Dollar

The amount of satisfaction or usefulness gained per unit of currency spent, used to measure consumer value.

Marginal Utility

Marginal utility is the change in total satisfaction or utility that a consumer experiences from consuming an additional unit of a good or service.

Utility Maximization

The process by which consumers allocate their spending to achieve the greatest level of satisfaction or utility from their available resources.