Practice Questions
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How do per-unit taxes typically affect consumer and producer surplus in a market?
When a tax is added, it raises prices for consumers and lowers the amount producers receive. Other options are incorrect because Some might think both...
How does the imposition of a per-unit tax affect government revenue and market equilibrium in a competitive market?
A per-unit tax means the government collects money for each item sold. Other options are incorrect because Some might think a tax only raises money wi...
In the context of per-unit taxes, how does the distribution of the tax burden affect market equilibrium, and what justification supports the implementation of such taxes?
The tax burden can be shared between buyers and sellers. Other options are incorrect because This answer suggests only consumers pay the tax; This opt...
How do per-unit taxes on goods affect producer prices and consumer behavior, particularly when examining products like cigarettes and alcohol?
Per-unit taxes make producers raise their prices. Other options are incorrect because This answer suggests that taxes lower prices, which is not true;...
How does an increase in per-unit taxes affect government revenue, considering the elasticity of demand and potential behavioral changes in consumption?
When demand is elastic, people buy less if prices go up. Other options are incorrect because Some think taxes always bring in more money; This suggest...
What is a per-unit tax?
A per-unit tax is a fee added for each item sold. Other options are incorrect because This option confuses per-unit tax with income tax; This option s...
What is the likely effect of a per-unit tax on consumer prices for a product?
When a tax is added to each unit sold, sellers often raise prices. Other options are incorrect because Some might think prices go down with a tax; It’...
How does the implementation of a per-unit tax typically affect the prices that producers receive for their goods?
A per-unit tax means producers have to pay a fee for each item they sell. Other options are incorrect because Some might think a tax increases prices ...
Which of the following scenarios best illustrates the effect of a per-unit tax on a good with negative externalities?
When a factory pays a tax for each ton of steel it makes, it costs more to produce. Other options are incorrect because This option suggests that a ta...
A local government decides to impose a per-unit tax on plastic bags to reduce their usage due to environmental concerns. How will this tax likely affect the market for plastic bags and the behavior of consumers and producers in this context?
The tax makes it more expensive for producers to make plastic bags. Other options are incorrect because This answer suggests that a tax would help pro...
How does a per-unit tax affect producers' output decisions in the presence of negative externalities?
A per-unit tax makes producers pay more for each item they sell. Other options are incorrect because Some might think a tax means more profit, but it ...
Per-unit taxes are designed to address __________ by aligning the marginal private cost with the marginal social cost, thus encouraging producers to reduce output to a socially efficient level.
Negative externalities happen when a product's production harms others, like pollution. Other options are incorrect because Market efficiency means re...
Per-unit taxes on production can be likened to which of the following scenarios? A:B :: C:?
A fine for littering makes people think twice before polluting. Other options are incorrect because A speed limit is about safety, not about changing ...
Arrange the following steps in the correct order to understand the impact of per-unit taxes on market efficiency: A) Government imposes a per-unit tax on producers, B) Producers increase their marginal costs, C) Producers reduce output to align with socially efficient levels, D) Market equilibrium is adjusted to reflect the new costs.
First, the government adds a tax on each item producers sell. Other options are incorrect because This option suggests producers reduce output before ...
Which of the following statements accurately describe the implications of per-unit taxes on market efficiency and production? Select all that apply.
Other options are incorrect because This statement suggests that taxes always lead to less production; This implies that taxes force all producers to ...
What is the primary effect of implementing a per-unit tax on a good like copper in a market with negative externalities?
A per-unit tax makes producers pay more for each unit they produce. Other options are incorrect because Some might think that a tax lowers production ...
How does a per-unit tax on a good affect the market equilibrium and the behavior of producers?
A per-unit tax raises the cost for producers. Other options are incorrect because This option suggests that producers will supply more, but higher cos...
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