In a perfectly competitive economy in general competitive equilibrium, a per unit sales tax imposed on a particular good is likely to result in:
A)unemployed resources.
B)too little of other goods being produced.
C)too much of that good being produced.
D)too little of that good being produced.

Question

Quizplus · Accepted Answer

In a perfectly competitive economy, a per unit sales tax on a particular good will increase the price of that good for the consumer, resulting in a decrease in demand for the good. As a result, producers will reduce the quantity supplied of that good, which will lead to too little of that good being produced.

In a Perfectly Competitive Economy in General Competitive Equilibrium, a Per