As the Tax on a Good Increases from $1 Per

question 34

Multiple Choice

As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on,the

• A)tax revenue increases at first,but it eventually peaks and then decreases.
• B)deadweight loss increases at first,but it eventually peaks and then decreases.
• C)tax revenue always increases,and the deadweight loss always increases.
• D)tax revenue always decreases,and the deadweight loss always increases.

---

Definitions:

Non-Free Trade

Trade practices where governments impose tariffs, quotas, or regulations to restrict the free flow of goods and services between countries.

Agricultural Subsidies

Government payments to farmers to supplement their income, manage the supply of agricultural commodities, and influence the cost and supply of such goods.

Tariff

A tax imposed on imported goods, intended to increase the price of foreign products to protect domestic producers.

Quota

A government-imposed trade restriction that limits the number or monetary value of goods that can be imported or exported during a specific time frame.