Asked by
Paula Youmans
on Dec 11, 2024
Verified
If the Federal government enacts a new excise tax of $1.50 per case of soda, which of the following is most likely to occur?
A) Consumers of soda will pay a higher price and buy a larger quantity.
B) Consumers of soda will pay a higher price, which will increase the profits of soda companies, inducing them to sell a larger quantity.
C) Consumers of soda will pay a higher price and buy a smaller quantity.
D) Consumers of soda will buy less bottled water.
Excise Tax
A tax levied on specific goods, services, or activities, such as tobacco, alcohol, and gasoline, usually to discourage use or generate revenue.
Consumers
Individuals or entities that purchase goods and services for personal use.
Soda
A carbonated soft drink, often flavored and sweetened.
- Scrutinize how taxes influence both consumers and merchants in a marketplace.
- Evaluate the impact of specific taxes on behavior and market outcomes.
Verified Answer
FM
Learning Objectives
- Scrutinize how taxes influence both consumers and merchants in a marketplace.
- Evaluate the impact of specific taxes on behavior and market outcomes.