An Unintended Effect of a New Tax Placed on the Producers

question 67

Multiple Choice

An unintended effect of a new tax placed on the producers of good A may include

• A) a higher price paid by the consumers of good A.
• B) less consumers' surplus for the buyers of good A.
• C) fewer workers employed in the production of good A.
• D) an increase in the supply of good A.
• E) a, b, and c

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Definitions:

Economic Efficiency

A state in which resources are allocated in the most effective manner, maximizing the production of goods and services without wasting resources.

Representative Democracy

A system of government where citizens elect representatives to make decisions and enact laws on their behalf.

Balanced Budget Amendment

A proposed amendment to the U.S. Constitution requiring that the federal government not spend more than its income.

Shortsightedness Effect

A situation where decision-makers prioritize immediate benefits over long-term gains, potentially leading to suboptimal outcomes.