Question: Why does the government place excise taxes on goods such
Why does the government place excise taxes on goods such as cigarettes and alcohol? Is it because these pro- ducts are “sinful”? (These taxes are often called “sin taxes.”) Do you believe that excise taxes reduce consumption of these goods by very much? What does your response to this question imply regarding the amount of government excise tax revenue?
Answer to relevant QuestionsWhat is meant when we say that a public good is indivisible, nonrivalrous, and nonexcludable? How does pollution distort resource allocation in the economy? Consider both over- and under-allocation of resources. What could be done to help inner-city schools other than providing them with more funding? What sort of tax system do you feel is the fairest? What are the advantages and disadvantages of regressive, progressive, and proportional taxes? How might the U.S. government encourage greater research and development? How would R&D benefit the economy?
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