If the government wants to limit sales of a particular good,it may do so by imposing a quota.However,the same reduction in sales may be achieved by an appropriately chosen excise tax.

Question

Quizplus · Accepted Answer

A quota limits the physical amount of a particular good that can be produced and sold, while an excise tax increases the cost of producing and selling a particular good. Both methods can achieve a reduction in sales, but an excise tax can also generate revenue for the government.

If the Government Wants to Limit Sales of a Particular