A Tax Levied on Purchases of a Particular Good or Service

question 84

Multiple Choice

A tax levied on purchases of a particular good or service

• A) is illegal because it is discriminatory.
• B) always leads to a reduction in total tax revenues.
• C) always leads to an increase in total tax revenues.
• D) is an excise tax.

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Definitions:

Marginal Costs

The extra expense associated with manufacturing an additional unit of a product or service.

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, based on their willingness to pay.

Demand

The willingness and ability of consumers to purchase goods or services at different prices.

Price

The expected fiscal outlay, necessitated, or expended in compensation for an item.