The government imposes a unit excise tax on bubble gum. what happens as a result?

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Social Studies

Dennis Donovan

17 January, 12:39

The government imposes a unit excise tax on bubble gum. what happens as a result?

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Gracelyn Knight · Answer 1

The government imposes a unit excise tax on bubble gum. as a result that At the original market price, there is a bubble gum shortage and so price rises. There will be no change in either the market price or equilibrium quantity as long as the excise tax rate is 5 percent or less.

Julius · Answer 2

At the original market price, there is a bubble gum shortage and so price rises.

when the government excise tax on bubble gum, less producers would see it as a profitable commodity, which lead to the shortage of the product in the market. Since the rarity now increased, more people are willing to pay higher price for the product