Solved

Which Statement Is True of a Tax Levied on One

Question 30

Multiple Choice

Which statement is true of a tax levied on one product in a general equilibrium model?


A) Taxes always distort the most efficient flow of resources in an economy.
B) Taxes cannot distort efficient resource flows because they become part of the price.
C) Taxes on producers distort efficient resource flows but taxes on consumers do not affect efficiency.
D) Taxes will hurt efficiency unless they are designed to offset other inefficiencies in the system.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents