Which of the following statements is true of the tax on gasoline?
A)The cost of collecting a gasoline tax outweighs the revenues raised by the tax.
B)It is preferred to tolls as the best solution to road congestion.
C)It discourages driving on noncongested roads, even though there is no congestion externality for these roads.
D)Both b and c are correct.

Question

Quizplus · Accepted Answer

A tax on gasoline discourages driving, even on non-congested roads, because it increases the overall cost of driving. However, it does not necessarily outweigh the revenues raised by the tax, and it is not necessarily preferred to tolls as the best solution to road congestion.

Which of the Following Statements Is True of the Tax