How Does the Imposition of an Excise Tax on a Good

question 170

Multiple Choice

How does the imposition of an excise tax on a good affect its market equilibrium?

• A) Equilibrium quantity decreases, and equilibrium price decreases.
• B) Equilibrium quantity decreases, and equilibrium price increases.
• C) Equilibrium quantity increases, and equilibrium price decreases.
• D) Equilibrium quantity increases, and equilibrium price increases.

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Definitions:

Static Reasoning

A way of thinking in which individuals assume that the world is unchanging and what is true now will always be true.

Preoperational Thought

A stage in Piaget's theory of cognitive development where children from about 2 to 7 years of age are able to use symbols and language but do not yet understand concrete logic.

Conservation

The careful preservation and protection of something, especially aimed at preventing the depletion of natural resources.

Private Speech

The internal dialogue that occurs when people talk to themselves (either silently or out loud).