#1
Which of the following is an example of an excise tax?
Tax on gasoline
ExplanationExcise tax is levied on specific goods like gasoline.
#2
Who ultimately bears the burden of an excise tax?
Consumers
ExplanationConsumers bear the cost of excise tax through higher prices.
#3
Which of the following is NOT a characteristic of an excise tax?
It is usually a percentage of the price of the good
ExplanationExcise tax isn't typically based on a percentage of price.
#4
Which of the following best describes an excise tax?
A tax levied on specific goods produced or consumed within a country
ExplanationExcise tax targets specific goods produced or consumed.
#5
When an excise tax is imposed on a good, what generally happens to the price paid by consumers?
The price increases
ExplanationConsumers pay higher prices due to excise tax.
#6
What is the main economic concept behind tax incidence?
Elasticity of demand
ExplanationTax incidence depends on how demand changes with price.
#7
If the demand for a good is relatively inelastic, who bears most of the burden of an excise tax?
Consumers
ExplanationConsumers bear more burden with inelastic demand.
#8
In which situation would a tax on producers have the same effect as a tax on consumers?
When demand is perfectly inelastic
ExplanationPerfectly inelastic demand makes tax impact same on producers and consumers.
#9
How does the long-run incidence of an excise tax differ from the short-run incidence?
In the long run, consumers bear more of the tax burden
ExplanationOver time, consumers absorb more of the tax.
#10
Which of the following factors determines the incidence of an excise tax?
The elasticity of supply and demand
ExplanationTax incidence depends on supply and demand elasticity.
#11
What is the relationship between the price elasticity of demand and the incidence of an excise tax?
As elasticity increases, consumers bear more of the tax burden
ExplanationMore elastic demand shifts tax burden to producers.
#12
Which of the following is an example of a good with relatively inelastic demand?
Salt
ExplanationGoods like salt often have inelastic demand.
#13
How does the elasticity of supply affect the incidence of an excise tax?
As elasticity of supply increases, producers bear more of the tax burden
ExplanationMore elastic supply shifts tax burden to producers.
#14
What is the economic rationale behind imposing an excise tax on goods like cigarettes and alcohol?
To discourage consumption due to negative externalities
ExplanationExcise tax aims to reduce harmful consumption.
#15
How does the elasticity of supply influence the incidence of an excise tax?
Higher elasticity of supply leads to higher tax incidence on producers
ExplanationMore elastic supply shifts tax burden to producers.