AP Macroeconomics : How to find consumption

Study concepts, example questions & explanations for AP Macroeconomics

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Example Questions

Example Question #1 : Consumption

An excise tax levied by a state government on gasoline is paid to the government by __________.

Possible Answers:

the oil company who sells the gasoline

the individual owners of gas stations

only individuals who buy a certain amount of gasoline

any individual who buys the gasoline

Correct answer:

the oil company who sells the gasoline


An excise tax is an indirect tax, or one that is not paid directly by consumers, but instead by the producers of the good being taxed. Gasoline excise taxes are typically paid by the oil companies who refine, produce, and sell the gasoline, in order to offset pollution and other trandportation costs governments incur from the sale of gas. Quite often, the cost of the tax to the company is passed on to the consumer in the form of higher prices.

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