Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It decreases the prices producers receive.
B
It increases the prices producers receive.
C
It has no effect on the prices producers receive.
D
It eliminates the prices producers receive.
Understanding the Answer
Let's break down why this is correct
Answer
A per-unit tax is a fee that the government charges producers for each unit of a good they sell. When this tax is implemented, producers often respond by raising the prices of their goods to cover the cost of the tax. This means that while consumers may end up paying more for the product, the amount producers receive after paying the tax can still be lower than before. For example, if a tax of $1 is added to a product that originally sold for $5, producers might raise the price to $6, but they will only keep $5 after paying the tax. Therefore, the tax can lead to higher prices for consumers while affecting the overall earnings of producers.
Detailed Explanation
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 for producers; It's a common belief that taxes don't change prices.
Key Concepts
effects on producer prices
Topic
Understanding Per-Unit Taxes
Difficulty
easy level question
Cognitive Level
understand
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