When a Product Is Taxed

question 120

Multiple Choice

When a product is taxed,

• A) part of the initial consumer surplus goes to the government as revenue.
• B) part of the initial consumer surplus becomes a deadweight loss.
• C) the producer surplus never changes because consumers pay taxes, not producers.
• D) Both answers A and B are correct.
• E) Both answers B and C are correct.

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Definitions:

Regulatory Agencies

Government bodies responsible for supervising the application of laws and regulations within specific industries to ensure fairness, safety, and compliance.

Unelected Officials

Individuals serving in governmental positions who have not been elected but are appointed or hired within the bureaucracy.

Public Good

Services or products offered freely to the whole of a community, delivered by the government or by non-profit organizations and individuals, without seeking profit.

Majority Vote

A decision rule where more than half of the participants need to agree on a proposal for it to be approved.