A Unit Tax Is a Fixed Amount Per Unit of a Commodity

question 30

Multiple Choice

A unit tax is a fixed amount per unit of a commodity sold.

• A) True
• B) False
• C) Uncertain

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Definitions:

Profit-Maximizing Output

The level of production at which a firm achieves the highest possible profit, where marginal revenue equals marginal cost.

X-Inefficiency

A concept where a firm operates with higher costs than are necessary due to lack of competition or internal inefficiencies.

Economies Of Scale

Cost savings that accrue to firms from upscaling their production operations, where there's a typical decrease in the cost per unit with larger production volumes.

Average Cost

The sum of all production expenses divided by the quantity of items made, showing the expense for each unit of product.