Asked by Trang Nguyen on Jun 24, 2024
Verified
Which of the following taxes would impose the smallest excess burden on an individual?
A) a tax on Diet Pepsi
B) a tax on all diet beverages
C) a tax on all soft drinks
D) a tax on all types of beverages, including water
Excess Burden
The cost to society created by market inefficiency, typically due to taxes or other government policies disrupting the equilibrium.
Tax
A mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.
Diet Pepsi
A low-calorie carbonated soft drink produced by PepsiCo, branded as a healthier alternative to regular Pepsi.
- Apprehend the idea of excess burden and its influence on tax policy efficiency.
Verified Answer
RJ
Rojenee JonesJun 30, 2024
Final Answer :
D
Explanation :
A tax on all types of beverages, including water, would impose the smallest excess burden because it affects a broader base, reducing the individual's ability to substitute to untaxed goods, thereby minimizing distortions in consumption choices.
Learning Objectives
- Apprehend the idea of excess burden and its influence on tax policy efficiency.