Question

The government might levy an excise tax on a product if it wants to collect _____ from the purchase of that particular good or service. The government would prefer to tax goods with a ____ high demand. The government might also tax a product to incentivize consumers to ____ modify their behavior. If taxes are too high on a certain good or service, many consumers will cease buying ____ that good.

Answer 1

An excise tax is a tax placed on a specific good or service that the government uses to collect revenue or modify consumer behavior.

Step-by-step explanation:

An excise tax is a tax placed on a specific good or service. It can be used by the government to collect revenue from the purchase of that particular product. The government may prefer to tax goods with a high demand because it knows that people will continue to buy them regardless of the tax.

Additionally, the government may use taxes as a way to incentivize consumers to modify their behavior. If taxes are too high on a certain good or service, many consumers will stop buying it.