What Happens When the Government Imposes a Unit Excise Tax

question 198

Multiple Choice

What happens when the government imposes a unit excise tax on a good?

• A) The amount of the tax is added to the current equilibrium price.
• B) The demand for the newly taxed good decreases.
• C) That good's supply curve shifts down by the amount of the tax.
• D) The newly taxed good's supply curve shifts vertically upward by the amount of the per-unit tax being levied.

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Definitions:

United States

A country in North America consisting of 50 states and a federal district, known for its diverse geography, culture, and being a global economic and political power.

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The body's reduced response to a substance (like a drug) due to repeated use, which often leads to needing larger doses to achieve the original effect.