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hey everyone Im mr. Wallace and you will love economics [Music] [Music] when appropriate government can intervene in the market in the form of an excise tax in order to manipulate the price and quantity of a product to meet social goals and values an excise tax is a per unit duty levied on specific Goods these taxes are aimed at decreasing the production of a good or service that has a negative effect on society essentially the government is finding a firm for producing an undesirable good or service the goal of an excise tax is to minimize social cost or negative externalities associated with the production of a good excise taxes may also be used in order to decrease the production of a good that may be over produced heres how it works supply and demand in the market for goods see has established an equilibrium price of $5 and an equilibrium output of 400 units however the production of goods see creates negative externalities for society and the government wants to reduce the harm