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:

Certainty

The state or quality of being free from doubt or reservations; a condition of being sure about something.

Objectivity

The practice of basing judgments and decisions on observable phenomena and uninfluenced by emotions or personal biases.

Risk

Risk refers to the potential for loss or harm when engaging in an activity or making a decision, often quantified in terms of probability and impact.

Land Ownership

The legal right or title to possess and use a specific parcel of land.