In the Absence of Taxes,Janet Would Prefer to Purchase a Large

question 102

Multiple Choice

In the absence of taxes,Janet would prefer to purchase a large sport utility vehicle (SUV) .However,the government has recently decided to place a $10,000 nuisance tax on SUVs.Which statement best reflects the effect of this tax if Janet decides to purchase a small economy car as a result of the tax

• A)Other people who choose to purchase SUVs will incur the cost of the deadweight loss of the tax.
• B)There are no deadweight losses as long as some people still choose to purchase SUVs.
• C)All deadweight losses are mitigated if there is a net decrease in air pollution.
• D)Janet is worse off, and her loss of welfare is part of the deadweight loss of the tax.

---

Definitions:

Contract Law

The branch of law that deals with the creation, enforcement, and termination of contracts between parties.

Sole Proprietor

An individual who owns and operates a business by themselves, bearing full responsibility for its debts and legal actions.

Limited Liability

A legal structure where a person's financial responsibility for a company's debts and obligations is restricted to a fixed amount, typically their investment.

Sole Proprietorship

A business owned and operated by a single individual, where there is no legal distinction between the owner and the business.