Question: Under what conditions would it be possible for an excise tax to have no efficiency cost and in fact increase economic efficiency? Show this graphically.

Under what conditions would it be possible for an excise tax to have no efficiency cost and in fact increase economic efficiency? Show this graphically. Support your answer with an example of something that has a perfectly inelastic supply or nearly perfectly inelastic supply.

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Excise tax is an indirect tax levied on the locally produced goods by the government Economic effici... View full answer

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