Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A factory produces 100 tons of steel and pays a tax on each ton, leading to a decrease in production due to higher costs.
B
A consumer decides to buy more of a product because it is now cheaper due to a tax reduction.
C
A company increases its output of a good after a per-unit tax is levied, believing it will increase profits.
D
A government provides subsidies to producers to encourage more production in a market.
Understanding the Answer
Let's break down why this is correct
Answer
A per-unit tax is a charge that the government places on each unit of a good sold, and it is often used to reduce negative externalities, which are harmful effects on society or the environment caused by the production or consumption of a good. For example, if a factory produces a lot of pollution while making its products, the government might impose a tax on each item the factory sells. This tax makes the goods more expensive, which can lead to fewer people buying them and encourages the factory to find cleaner ways to produce. As a result, the factory might reduce its pollution, benefiting the environment and public health. This scenario shows how a per-unit tax can help lessen the negative impact of harmful goods on society.
Detailed Explanation
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 tax makes things cheaper, which is not true; This option shows a misunderstanding of how taxes work.
Key Concepts
Per-unit taxes
Negative externalities
Market efficiency
Topic
Understanding Per-Unit Taxes
Difficulty
easy level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.