Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
They increase producer prices while decreasing consumption of the taxed goods.
B
They decrease producer prices and have no effect on consumption.
C
They have no impact on producer prices but increase consumption of the taxed goods.
D
They increase both producer prices and consumption of the taxed goods.
Understanding the Answer
Let's break down why this is correct
Answer
Per-unit taxes are fees that the government charges for each unit of a product sold, like cigarettes or alcohol. When a per-unit tax is applied, producers often raise their prices to cover the cost of the tax, which means consumers end up paying more for these products. For example, if a tax of $1 is added to a pack of cigarettes, the price might increase from $5 to $6, making it more expensive for smokers. This price increase can lead some consumers to buy fewer cigarettes or switch to cheaper alternatives, affecting their behavior. Overall, per-unit taxes can discourage consumption of certain goods by making them less affordable, especially for products that can be harmful to health.
Detailed Explanation
Per-unit taxes make producers raise their prices. Other options are incorrect because This answer suggests that taxes lower prices, which is not true; This option claims taxes don't change prices.
Key Concepts
effects on producer prices
examples of goods with per-unit taxes
behavioral changes in consumption
Topic
Understanding Per-Unit Taxes
Difficulty
hard level question
Cognitive Level
understand
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