During Recent Elections, Consumer Groups in Various States Attempted to Get

question 225

Multiple Choice

During recent elections, consumer groups in various states attempted to get the sales tax on all medication and drugs removed. They argued that such a tax is severely regressive. Which of the following is the economic interpretation of their statement?

• A) The poor fall ill more often than the rich.
• B) The poor pay higher prices for medication and drugs than the rich.
• C) The poor pay a higher percentage of their income in taxes on medication than the rich.
• D) All consumers pay too much money for medication and drugs.
• E) The sales tax discourages the poor from seeking medical treatment.

---

Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.