A tax is a payment made to:

• A. consumers as a reward for purchasing goods
• B. the government to finance public expenditures
• C. banks to secure loans
• D. private firms to increase their profits

Answer: (B)

Verified step by step guidance

1. Understand the definition of a tax in microeconomics: A tax is a compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and public expenditures.
2. Recognize that taxes are not payments made to consumers, banks, or private firms, but rather to the government.
3. Recall that the purpose of taxes is to generate revenue for the government to finance public goods and services such as infrastructure, education, and defense.
4. Eliminate the incorrect options by matching the definition: payments to consumers, banks, or private firms do not fit the role of a tax.
5. Conclude that the correct understanding is that a tax is a payment made to the government to finance public expenditures.