When a Tax Is Levied on a Good

question 52

Multiple Choice

When a tax is levied on a good,

• A)government collects revenues which might justify the loss in total welfare.
• B)there is a decrease in the quantity of the good bought and sold in the market.
• C)a wedge is placed between the price buyers pay and the price sellers effectively receive.
• D)All of the above are correct.

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Definitions:

Population

The total number of individuals or entities within a specified area or group.

Compounded Annually

The method of gaining interest on the original principal as well as on the interest accrued from prior periods, computed annually.

Eating Establishments

Businesses that serve food and beverages for consumption by the public, such as restaurants and cafes.

Operational

Referring to the day-to-day activities, processes, and functionalities of a business or organization.