CIPS Exam A6 Topic 1 Question 46 Discussion

Actual exam question for CIPS's A6 exam

Question #: 46
Topic #: 1

According to economic theory, which of the following best describes what should happen to the sales of a product if the government increases the tax on them?

AThe sales increase

BThe sales decrease

CThe sales remain the same

DThe sales double.

Show Suggested Answer

Suggested Answer: C

by Tasia at Mar 10, 2024, 09:49 PM

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Gwenn

6 months ago

If the tax doubles, then the sales might significantly decrease, so I think the answer is B) The sales decrease.

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Youlanda

6 months ago

That's true, if the product is a necessity, the sales might not decrease as much.

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Charlie

6 months ago

But wouldn't it also depend on the demand for the product and how elastic it is?

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Erick

6 months ago

I agree with Youlanda, higher taxes usually lead to lower sales.

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Youlanda

7 months ago

If the government increases tax on a product, sales will probably decrease.

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Quinn

7 months ago

I believe the correct answer is B) The sales decrease because higher prices usually lead to lower demand.

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Dorthy

7 months ago

Even if it's a necessity, some people may still reduce their purchase due to higher prices.

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Elinore

7 months ago

But what if the product is a necessity? Would the sales still decrease?

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Narcisa

8 months ago

I agree with Dorthy, when the government increases tax, people are less likely to buy the product.

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Dorthy

8 months ago

I think the answer is B) The sales decrease.

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