If an excise tax is imposed on restaurant meals,
A) fewer meals will be produced and sold
B) more meals will be produced and sold
C) the government's tax revenue will fall
D) the market price of meals will decrease
E) restaurants will sell more meals,but at a lower price per meal

Question

Quizplus · Accepted Answer

When an excise tax is imposed on restaurant meals, the cost of producing and selling meals increases. This cost increase may lead to a decrease in the quantity of meals produced and sold, as restaurants may find it less profitable to continue operating at the same level. Therefore, the imposition of an excise tax is likely to result in fewer meals being produced and sold.

If an Excise Tax Is Imposed on Restaurant Meals