A specific tax is imposed as:
Correct answer: A. A fixed amount per unit sold
- A. A fixed amount per unit sold
- B. A fixed percentage of income
- C. A fixed percentage of value
- D. A fixed amount on total profit
Explanation
A specific tax charges the same monetary amount on each unit of a commodity. An ad valorem tax, by contrast, is calculated as a percentage of the commodity's value.
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About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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