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In: Economics

Aiming at reducing air pollution, the government decided to reduce the country’s use of gasoline by...

Aiming at reducing air pollution, the government decided to reduce the country’s use of gasoline by imposing an $1 tax on each gallon of gasoline sold. Are consumers of gasoline helped or hurt by the tax? (Hint- draw the diagram to see if consumer surplus increases or decreases)

A. Consumer surplus is unchanged

B. Consumers are helped

C. Consumers are hurt

D. Not enough information to conclude

Aiming at reducing air pollution, the government decided to reduce the country’s use of gasoline by imposing an $1 tax on each gallon of gasoline sold.

Briefly explain why the tax on gasoline sold can help reduce air pollution?

Aiming at reducing air pollution, the government decided to reduce the country’s use of gasoline by imposing an $1 tax on each gallon of gasoline sold.

Are producers of gasoline helped or hurt by the tax? (Hint- draw the diagram to see if producer surplus increases or decreases)

A.

Producer surplus are unchanged
B.

Not enough information to conclude
C.

Producers are hurt
D.

Producers are helped

Solutions

Expert Solution

Rahul Sunny answered 1 year ago
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