When a Unit Tax of $0

question 2

Multiple Choice

When a unit tax of $0.50 is levied on a product

• A) the entire $0.50 is paid by the consumer.
• B) the entire $0.50 is paid by the producer.
• C) both the consumer and producer pay $0.50 each.
• D) the consumer pays part of the $0.50 and the producer pays the rest.

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Definitions:

Consumption Bundle

A combination of goods and services that a consumer chooses to consume at a given time.

Budget Constraint

The limit on the consumption patterns of an individual or household based on their income and the prices of goods and services.

Feasible

Capable of being done or achieved; possible within a set of constraints or conditions.

Gallons of Gasoline

A measurement of gasoline volume, with one gallon equal to approximately 3.785 liters, commonly used in the United States for fuel transactions.