Read the following excerpt: 'In the UK, fuel duty is levied per unit of fuel purchased and is included in the price paid for petrol, diesel and other fuels used in vehicles or for heating. The rate depends on the type of fuel: the headline rate on standard petrol and diesel has been reduced from 57.95 pence to 52.95 pence per litre.' Suppose that, in order to reduce greenhouse gas emissions, the UK government is considering raising fuel duty on standard petrol and diesel. Suppose that the government intends to earmark the additional fuel tax revenue, not for subsidising less carbon-intensive energy production (e.g., wind energy) but for supporting higher education (e.g., reduction in university fees). Are there additional theoretical implications in terms of efficiency in resource allocation, due to the intended use of the revenue? Explain.
Read the following excerpt: 'In the UK, fuel duty is levied per unit of fuel purchased and is included in the price paid for petrol, diesel and other fuels used in vehicles or for heating. The rate depends on the type of fuel: the headline rate on standard petrol and diesel has been reduced from 57.95 pence to 52.95 pence per litre.' Suppose that, in order to reduce greenhouse gas emissions, the UK government is considering raising fuel duty on standard petrol and diesel. Suppose that the government intends to earmark the additional fuel tax revenue, not for subsidising less carbon-intensive energy production (e.g., wind energy) but for supporting higher education (e.g., reduction in university fees). Are there additional theoretical implications in terms of efficiency in resource allocation, due to the intended use of the revenue? Explain.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Read the following excerpt: 'In the UK, fuel duty is levied per unit of fuel purchased and is included in the price paid for petrol, diesel and other fuels used in vehicles or for heating. The rate depends on the type of fuel: the headline rate on standard petrol and diesel has been reduced from 57.95 pence to 52.95 pence per litre.' Suppose that, in order to reduce greenhouse gas emissions, the UK government is considering raising fuel duty on standard petrol and diesel. Suppose that the government intends to earmark the additional fuel tax revenue, not for subsidising less carbon-intensive energy production (e.g., wind energy) but for supporting higher education (e.g., reduction in university fees). Are there additional theoretical implications in terms of efficiency in resource allocation, due to the intended use of the revenue? Explain.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education