Approximately 50,000 luxury boats (priced $100,000 or more) are currently produced each year. Using the economic way of thinking, how much revenue would the government actually generate with a $10,000 excise tax on luxury boats?

A) $500 million
B) less than $500 million
C) more than $500 million
D) approximately $5 billion

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Anthony Maldonado · Accepted Answer

Final Answer : B, Explanation :  The imposition of a $10,000 excise tax would likely reduce the quantity of luxury boats sold due to higher prices, leading to less than 50,000 boats being sold. Therefore, the revenue generated would be less than $500 million.

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