When taxes are imposed on a commodity:
A)there is never a deadweight loss
B)some consumers alter their consumption by not purchasing the taxed commodity
C)tax revenue will rise by the amount of the tax multiplied by the before-tax level of consumption
D)these taxes are considered non-distortionary

Question

Quizplus · Accepted Answer

When taxes are imposed on a commodity, consumers may choose to alter their consumption by not purchasing the taxed commodity, leading to a decrease in overall consumption and potentially a deadweight loss.

When Taxes Are Imposed on a Commodity