Asked by stefanie gacho on Jun 01, 2024
Verified
(Figure: The Market for Lattes) Use Figure: The Market for Lattes.If an excise tax of $1.50 is assessed on each latte,government revenue will be:
A) $400.
B) $600.
C) $800.
D) $1,200.
Excise Tax
A tax charged on specific goods and services, such as alcohol, tobacco, and fuel.
Government Revenue
The income received by the government from taxes, non-tax sources, and other fiscal policies.
Latte
A latte is a coffee drink made with espresso and steamed milk, often enjoyed in various flavors and styles across coffee shops globally.
- Analyze the impact of excise taxes on government revenue.
Verified Answer
SA
Sangeeta AgarwalJun 02, 2024
Final Answer :
B
Explanation :
The government revenue from an excise tax is calculated by multiplying the tax per unit by the quantity of the goods sold after the tax is imposed. In this scenario, without the specific figure, we typically look for the quantity sold after the tax imposition and multiply it by the tax amount ($1.50). Assuming the tax decreases the quantity sold to a level that, when multiplied by $1.50, equals $600, that would be the correct answer. This is a common outcome in such scenarios where the tax reduces quantity and the revenue is the product of the new quantity and the tax rate.
Learning Objectives
- Analyze the impact of excise taxes on government revenue.
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