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Excise Tax

Description: This quiz will test your knowledge on Excise Tax.
Number of Questions: 15
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Tags: economics taxation excise tax
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What is the purpose of excise tax?

  1. To generate revenue for the government

  2. To discourage the consumption of certain goods

  3. To protect domestic industries

  4. All of the above

Show answer
Correct Option: D
Explanation:

Excise tax is levied on the sale of specific goods and services, with the aim of generating revenue, discouraging consumption, and protecting domestic industries.

Which of the following is not an example of an excise tax?

  1. Sales tax

  2. Value-added tax

  3. Property tax

  4. Excise duty

Show answer
Correct Option: C
Explanation:

Property tax is not an excise tax, as it is levied on the ownership of property rather than on the sale of goods or services.

What is the difference between an excise tax and a sales tax?

  1. Excise tax is levied on the sale of specific goods, while sales tax is levied on the sale of all goods and services

  2. Excise tax is levied at a higher rate than sales tax

  3. Excise tax is levied by the federal government, while sales tax is levied by state and local governments

  4. None of the above

Show answer
Correct Option: A
Explanation:

Excise tax is levied on the sale of specific goods, such as tobacco, alcohol, and gasoline, while sales tax is levied on the sale of all goods and services.

What is the impact of excise tax on the price of goods?

  1. It increases the price of goods

  2. It decreases the price of goods

  3. It has no impact on the price of goods

  4. It depends on the elasticity of demand for the good

Show answer
Correct Option: D
Explanation:

The impact of excise tax on the price of goods depends on the elasticity of demand for the good. If demand is elastic, the price of the good will increase by less than the amount of the tax. If demand is inelastic, the price of the good will increase by more than the amount of the tax.

What is the impact of excise tax on the consumption of goods?

  1. It decreases the consumption of goods

  2. It increases the consumption of goods

  3. It has no impact on the consumption of goods

  4. It depends on the elasticity of demand for the good

Show answer
Correct Option: D
Explanation:

The impact of excise tax on the consumption of goods depends on the elasticity of demand for the good. If demand is elastic, the consumption of the good will decrease by more than the amount of the tax. If demand is inelastic, the consumption of the good will decrease by less than the amount of the tax.

What is the impact of excise tax on government revenue?

  1. It increases government revenue

  2. It decreases government revenue

  3. It has no impact on government revenue

  4. It depends on the elasticity of demand for the good

Show answer
Correct Option: A
Explanation:

Excise tax increases government revenue by generating additional tax revenue from the sale of specific goods and services.

What is the impact of excise tax on economic efficiency?

  1. It decreases economic efficiency

  2. It increases economic efficiency

  3. It has no impact on economic efficiency

  4. It depends on the elasticity of demand for the good

Show answer
Correct Option: A
Explanation:

Excise tax decreases economic efficiency by creating a deadweight loss, which is the loss of consumer and producer surplus that results from the tax.

What is the impact of excise tax on social welfare?

  1. It decreases social welfare

  2. It increases social welfare

  3. It has no impact on social welfare

  4. It depends on the elasticity of demand for the good

Show answer
Correct Option: A
Explanation:

Excise tax decreases social welfare by reducing consumer surplus and producer surplus.

What are some of the arguments in favor of excise tax?

  1. It can generate revenue for the government

  2. It can discourage the consumption of harmful goods

  3. It can protect domestic industries

  4. All of the above

Show answer
Correct Option: D
Explanation:

Excise tax can generate revenue for the government, discourage the consumption of harmful goods, and protect domestic industries.

What are some of the arguments against excise tax?

  1. It can be regressive

  2. It can create a deadweight loss

  3. It can be difficult to administer

  4. All of the above

Show answer
Correct Option: D
Explanation:

Excise tax can be regressive, create a deadweight loss, and be difficult to administer.

What are some of the most common types of excise taxes?

  1. Tobacco tax

  2. Alcohol tax

  3. Gasoline tax

  4. All of the above

Show answer
Correct Option: D
Explanation:

Tobacco tax, alcohol tax, and gasoline tax are some of the most common types of excise taxes.

How are excise taxes typically collected?

  1. At the point of sale

  2. Through excise stamps

  3. Through excise licenses

  4. All of the above

Show answer
Correct Option: D
Explanation:

Excise taxes are typically collected at the point of sale, through excise stamps, or through excise licenses.

What is the difference between an excise tax and a customs duty?

  1. Excise tax is levied on domestic goods, while customs duty is levied on imported goods

  2. Excise tax is levied by the federal government, while customs duty is levied by state and local governments

  3. Excise tax is levied on the sale of goods, while customs duty is levied on the importation of goods

  4. None of the above

Show answer
Correct Option: C
Explanation:

Excise tax is levied on the sale of goods, while customs duty is levied on the importation of goods.

What is the difference between an excise tax and a value-added tax?

  1. Excise tax is levied on the sale of specific goods, while value-added tax is levied on the sale of all goods and services

  2. Excise tax is levied at a higher rate than value-added tax

  3. Excise tax is levied by the federal government, while value-added tax is levied by state and local governments

  4. None of the above

Show answer
Correct Option: A
Explanation:

Excise tax is levied on the sale of specific goods, while value-added tax is levied on the sale of all goods and services.

What are some of the challenges associated with excise tax?

  1. It can be difficult to administer

  2. It can be regressive

  3. It can create a deadweight loss

  4. All of the above

Show answer
Correct Option: D
Explanation:

Excise tax can be difficult to administer, regressive, and create a deadweight loss.

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