Assume that a 50 percent gasoline tax led to a large increase in its price and only a small decrease in the quantity of gasoline demanded.Economic analysis would lead one to conclude that
A)gasoline should be taxed because the benefits of the tax would exceed the costs.
B)gasoline should not be taxed because the benefits are uncertain.
C) gasoline should not be taxed on ethical grounds since ethical benefits and costs can't be measured.
D)the benefits of taxing gasoline is a normative issue. Economic analysis can be used to contribute to discussion of this issue but cannot decide it.

Question

Quizplus · Accepted Answer

Economic analysis can provide information about the potential effects of a gasoline tax, such as the magnitude of the price increase and the quantity demanded. However, whether or not to tax gasoline is ultimately a normative issue that depends on values and priorities beyond the scope of economic analysis alone.

Assume That a 50 Percent Gasoline Tax Led to a Large