When a Tax Is Levied on a Good

question 52

Multiple Choice

When a tax is levied on a good,

• A)government collects revenues which might justify the loss in total welfare.
• B)there is a decrease in the quantity of the good bought and sold in the market.
• C)a wedge is placed between the price buyers pay and the price sellers effectively receive.
• D)All of the above are correct.

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Definitions:

Coercive Power

A form of authority based on the ability to deliver sanctions or punishments to those who do not comply with demands or expectations.

Channel

In marketing, the method or route through which a product or service is delivered to customers, including direct and indirect ways.

Break-even Analysis

A calculation to determine the point at which revenue received equals the costs associated with receiving the revenue, indicating no net loss or gain.

Cost-plus Pricing

A pricing strategy where the selling price is determined by adding a specific markup to a product's unit cost.