If the United States removed all excise taxes on cigarettes, which effect would NOT occur? a decrease in producer surplus an increase in producer surplus an increase in total surplus an increase in consumer surplus

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Business

Hezekiah

6 August, 01:43

If the United States removed all excise taxes on cigarettes, which effect would NOT occur? a decrease in producer surplus an increase in producer surplus an increase in total surplus an increase in consumer surplus

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Victor Franklin · Answer 1

Option B An increase in producer surplus

Explanation:

The reason is that the producer will gain maximum from the reduction in excise taxes. The customer demand for the product would increase and the company will be able to purchase more and this brings value to the cigarettes producers. The customer surplus will decrease because the customer will be willing to pay less and the price they pay is also less which means the difference between willing to pay and actually paid is less and as a result the customer surplus must decrease.