7 The following is a headline from the newspaper."Car drivers to pay higher taxes"What will result from an increased tax on cars?1 pointA increased employment in the car industryB increased petrol (gas) salesC reduced external costs of car useD reduced number of bus journeys
Question
7 The following is a headline from the newspaper."Car drivers to pay higher taxes"What will result from an increased tax on cars?1 pointA increased employment in the car industryB increased petrol (gas) salesC reduced external costs of car useD reduced number of bus journeys
Solution
The result of an increased tax on cars would most likely be C: reduced external costs of car use. Here's why:
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When the government increases taxes on cars, it makes owning and operating a car more expensive.
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As a result, some people might choose not to buy a car or to use their car less often to save money.
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This could lead to fewer cars on the road, which would reduce the external costs of car use.
External costs refer to the costs that are not paid by the user but by society as a whole, such as air pollution, noise pollution, and traffic congestion. By reducing the number of cars on the road, these costs would likely decrease.
It's important to note that this is a simplified explanation and the actual outcome would depend on a variety of factors, including how much the tax increases, how people respond to the increase, and what alternatives to car use are available.
Similar Questions
10. A government taxes the production of cars. What is likely to decrease?A) The cost of supplying carsB) The price of carsC) The revenue for the governmentD) The supply of cars at every price
A person has gotten a new job with a much higher salary. He plans to spend his extra money on a new car and a great stereo system for his apartment.Which statement best describes the tax situation this person will likely face in the next year?A.He will pay more in both income tax and sales tax.B.He will pay more in both property tax and income tax.C.He will pay more in sales tax but less in income tax.D.He will pay more in income tax but less in property tax.
All other things unchanged, a tax on a product that leads to an increase in the cost of production would:Question 17Select one:a.lead to an increase in supply.b.lead to a decrease in demand.c.result in an increased price.d.lead to a decrease in supply.
An increase in taxes will ________ consumption spending and a decrease in transfer payments will ________ consumption spending. a. increase; decrease b. decrease; increase c. decrease; decrease d. increase; increase
Explain the reasons why governments impose taxes and considerwhether an increase in income tax is fairer than an increase in salestaxes.
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