Question

How would the market for smartphones be affected if the government charged an excise tax of $5.00 on each smartphone sold? question 2 options:
a.the demand for smartphones would increase
b.the price of smartphones would rise by $5.00.
c.the supply of smartphones would decrease
d.the demand for smartphones would decrease?

Answer 1

how would the market for smartphones be affected if the government charged an excise tax of $5.00 on each smartphone sold ? C) The supply of smartphones would decrease. Excise taxes are based on the quantity of an item and not on its value. For example, the federal government imposes an excise tax of 18.4 cents on every gallon of gas purchased, regardless of the price charged by the seller. States often add an additional excise tax on each gallon of fuel. so, government will charged 5.00$ excise tax on smartphone will affected supply of smartphones would decrease.