In addition to raising money, the government imposes excise taxes to:

• A. discourage the consumption or production of certain goods
• B. ensure all goods are sold at a lower price
• C. increase the supply of taxed goods
• D. eliminate market competition

Answer: (A)

Verified step by step guidance

1. Understand what an excise tax is: it is a tax imposed on specific goods, often those considered harmful or undesirable, such as tobacco or alcohol.
2. Recognize the primary purpose of excise taxes beyond raising revenue: they are often used to influence behavior by making certain goods more expensive, thereby discouraging their consumption or production.
3. Evaluate the given options by considering the economic effects of excise taxes: they do not typically ensure lower prices, increase supply, or eliminate competition.
4. Recall that excise taxes increase the cost of producing or buying a good, which tends to reduce demand or supply, aligning with the goal of discouraging consumption or production.
5. Conclude that the correct purpose of excise taxes, besides raising money, is to discourage the consumption or production of certain goods.