-If a Unit Excise Tax Is Placed on a Good

question 65

Multiple Choice

-If a unit excise tax is placed on a good for which the demand is very unresponsive to a price change, then

• A) the government generally pays the majority of the tax.
• B) the consumers generally pay the majority of the tax.
• C) the producers generally pay the majority of the tax.
• D) producers and consumers pay equal portions of the tax.

---

Definitions:

Budget Line

A visual representation showcasing every possible pair of two products that can be bought within a specific budget.

Indifference Curves

Indifference curves represent combinations of goods or services that provide the same level of satisfaction to the consumer, illustrating consumer preferences and consumption choices.

Utility Levels

Refers to the subjective satisfaction or happiness that a consumer derives from consuming goods and services.

Indifference Curve

A graph showing different bundles of goods between which a consumer is indifferent, meaning they have no preference for one bundle over another.