Asked by Kassi Stolz on Jun 01, 2024
Verified
If the government removed the excise tax on gasoline,assuming that neither demand nor supply is perfectly inelastic,which effect would NOT occur?
A) an increase in consumer surplus
B) an increase in producer surplus
C) a decrease in producer surplus
D) an increase in total surplus
Excise Tax
A specific tax levied on certain goods, such as cigarettes or alcohol, usually to discourage their use or generate revenue.
Consumer Surplus
The difference between the total amount that consumers are willing and able to pay for a good or service versus the total amount they actually pay.
Producer Surplus
The difference between what producers are willing to sell a good for and the actual price they receive, reflecting extra profit.
- Explore the effect of removing excise taxes on market surplus and government revenue.
Verified Answer
Learning Objectives
- Explore the effect of removing excise taxes on market surplus and government revenue.
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