In a Market with an Upward-Sloping Supply Curve and a Downward-Sloping

question 77

Multiple Choice

In a market with an upward-sloping supply curve and a downward-sloping demand curve, the effects of an excise tax are as follows except:

• A)Consumer surplus will be lower than with no tax.
• B)Producer surplus will be lower than with no tax.
• C)The impact on the government budget will be positive.
• D)The tax will generally lead to a deadweight gain.

---

Definitions:

Consumption

The action of using up a resource or goods, often associated with the demand side of economics.

Income

Earnings received by an individual or business in exchange for work, services, or investments, typically measured over a certain period of time.

Pareto Efficient

An allocation of resources in which it is impossible to make any one individual better off without making at least one individual worse off.

Pure Exchange Economy

An economic model assuming no production, where agents trade existing goods and services, focusing on the allocation and distribution based on preferences.