From an economic perspective, imposition of a per unit tax is only advantageous if:

Question

Quizplus · Accepted Answer

Imposition of a per unit tax leads to a reduction in social welfare, as it creates a deadweight loss. Thus, the benefits of added tax revenues must be greater than the economic costs tied to this deadweight loss. Option A is incorrect because it states "social costs" instead of "economic costs." Option B is incorrect because it mentions only "private costs," ignoring the concept of deadweight loss. Option D is incomplete as it does not consider the costs of generating those tax revenues.

From an Economic Perspective, Imposition of a Per Unit Tax