A government program would impose a 25-cent tax on each pack of cigarettes in order to fund welfare programs.Such a policy
A)is not a Pareto improvement
B)is an example of an economically inefficient economy
C)would clearly not increase tax revenues
D)is a Pareto improvement
E)could only occur in a fair economy

Question

Quizplus · Accepted Answer

A Pareto improvement is a policy change that benefits at least one person without harming others. In this case, the tax on cigarettes would harm smokers while the funds generated would go towards welfare programs, which may or may not benefit the same group of people. Therefore, this is not a Pareto improvement.

A Government Program Would Impose a 25-Cent Tax on Each