When the Imposition of an Excise Tax Causes the Quantity

question 117

Multiple Choice

When the imposition of an excise tax causes the quantity demanded and quantity supplied to decrease relative to the no-tax equilibrium,this will result in:

• A)deadweight loss.
• B)increases in producer surplus.
• C)increases in consumer surplus.
• D)increases in both consumer and producer surplus.

---

Definitions:

Market Order

A type of trading order that instructs to buy or sell a security immediately at the current market price.

Discretionary Order

An order given to a broker allowing them discretion on the execution timing and price of a trade, within certain pre-established parameters.

Limit Order

An order to buy or sell a security at a specific price or better.

Maximum Possible Loss

The worst-case scenario loss that an investment or portfolio could suffer during a specified period.