A Disadvantage of Unit Excise Taxes Is They Create the Incentive

question 32

Multiple Choice

A disadvantage of unit excise taxes is they create the incentive _____.

• A)for producers to favor smaller products over larger products
• B)for producers to favor expensive products over inexpensive products
• C)for buyers to purchase more of the good then they otherwise would
• D)for buyers to shift to substitute goods with ad valorem excise taxes

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Definitions:

Underwriting

The process where insurers or investment banks assess the risk and establish the terms of coverage or offering for insurance policies or financial instruments.

Bought Deal

A securities offering in which an investment bank buys the entire issue from the issuer and then resells it to investors.

Venture Capitalist

A venture capitalist is an investor who provides capital to startup companies and small businesses with perceived long-term growth potential in exchange for equity.

Red Herring

An initial prospectus submitted by a company to the Securities and Exchange Commission (SEC), typically associated with the company's first public offering.