Concerns about the environment prompt Congress to pass a $1 surcharge tax on each gallon of gasoline. Which statement
best describes the impact of such a tax?
A.) Because of high elasticity of demand for gasoline, additional taxes would
Likelyhye little impact on demand.
Eliminate
B.)An additional excise tax could make the market for gasoline more efficient
by eliminating excessive consumption
C.)The tax would accelerate rapid transition to electric vehicles, lead to
increasing GDP and lower rates of unemployment
D.)Production and shipping costs would increase, thus increasing the cost of
consumer goods and services. These higher costs could likely lead to
slowing economic growth.

D.) Production and shipping costs would increase, thus increasing the cost of consumer goods and services. These higher costs could likely lead to slowing economic growth.

Explanation:

While surcharge tax on gasoline can indeed lead to slowing down the economic growth, its long-term effect on the country’s shift from the gasoline to more clean sources bring of energy would overweight the negative consequences of the former with its benefits.

For example, similar policies in the Nordic countries led to complete shift away from leaded gasoline.