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Per-Unit Tax

Definition

A per-unit tax is a tax imposed on each unit of a good or service produced or consumed. It is typically levied by the government as a way to generate revenue or discourage consumption.

Analogy

Imagine you are buying your favorite candy bars, but for every bar you purchase, you have to pay an extra tax. The more candy bars you buy, the more taxes you have to pay.

Related terms

Tax Incidence: Tax incidence refers to how the burden of a tax is distributed between buyers and sellers in a market.

Deadweight Loss: Deadweight loss represents the inefficiency and loss of economic welfare that occurs when resources are not allocated optimally due to market distortions like taxes.

Tax Revenue: Tax revenue is the total amount of money collected by the government from taxes imposed on individuals, businesses, or goods/services.