A disadvantage of unit excise taxes is they create the incentive _____
a. for producers to favor smaller products over larger products
b. for producers to favor expensive products over inexpensive products
c. for buyers to purchase more of the good then they otherwise would
d. for buyers to shift to substitute goods with ad valorem excise taxes
b
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Refer to the scenario above. The average total cost of Firm A when it produces 100 pens is $3, and the average total cost of Firm B when it produces 50 pens is $7. At these levels of production, which of the following statements is true?
A) Both firms incur losses. B) Firm A incurs a loss but Firm B makes a profit. C) Firm B incurs a loss but Firm A makes a profit. D) Both firms make profits.
Specifically targeted tax credits are simple and can save administrative costs
Indicate whether the statement is true or false