excise tax. a tax on sales of a good or service; drives a wedge (equal to the size of the tax) between the price paid by consumers and the price received by producers; creates missed opportunities. ex: gas, cigarettes.

What is the difference between an excise tax and a sales tax quizlet?

One difference between sales and excise taxes is that: sales taxes are calculated as a percentage of the price paid, while excise taxes are levied on a per-unit basis. Government lotteries are: used by a large number of states to supplement their tax revenues.

What are the different types of excise taxes?

1 Alcohol: per unit excise tax 2 Tobacco products: per unit excise tax 3 Firearms and ammunition: per unit excise tax 4 Gasoline and diesel: per unit excise tax 5 Sport fishing equipment: percentage of price excise tax 6 Airline tickets: percentage of price excise tax 7 Indoor tanning services: percentage of price excise tax

How are excise taxes passed on to the consumer?

The most common types of excise taxes are indirect. As the name suggests, you pay for these taxes but in an indirect way, in an increase in the price of the product. Merchants, who pay these excise taxes directly, pass the tax onto you in the form of a higher purchase price.

How does the incidence of excise tax affect the price?

The incidence of an excise tax depends on the price elasticity of demand and the price elasticity of supply. Deadweight loss is a cost to society or deficiency caused by market inefficiency (inefficient use of resources).

How much is the excise tax on cigarettes?

A specific excise tax is a set fee levied against products on a per-unit-sold basis. Again, this isn’t as complicated as it might seem. The federal government charges an excise tax of $1.01 on every pack of cigarettes. This helps explain why cigarettes are so expensive today.