If the Government Levies an Excise Tax in a Market

question 251

Multiple Choice

If the government levies an excise tax in a market whose supply curve is perfectly inelastic,the burden of the tax will fall completely on the _____,and the deadweight loss will equal _____.

• A)consumers;zero
• B)producers;zero
• C)consumers;the tax revenue
• D)producers;the tax revenue

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Definitions:

Private Investment

Financial resources allocated by individuals or entities into private sector projects or companies aiming to earn returns.

Uncertainty

A situation where the outcomes or variables of a situation are unpredictable, often leading to risk in economic and financial decisions.

International Incident

An event that might cause tension or conflict between nations, often involving diplomatic, military, or political issues.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.