Excise tax on a commodity

Reference no: EM1374438

Identify the fallacy in the following discussion: "The effect of an excise tax on a commodity might seem at 1st sight to increase the value that buyer pay. But an increase in price will diminish the demand. And a reduced demand will send the price down again. It is uncertain, therefore, that the tax will really raise the price."

Reference no: EM1374438

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