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JAMB Economics 1987 Question 37

Question 37

Public Finance

Ad valorem tax means

  1. A.a certain percentage tax based on the value of the commodity
  2. B.a certain percentage tax based on the volume of the commodity
  3. C.a tax on the income of the consumer
  4. D.payment of a tax on the profits made.
Show the answer and explanation

Answer: A (a certain percentage tax based on the value of the commodity)

Explanation

An ad valorem tax is charged as a percentage of the value (price) of a good.