Suppose a Tax Is Imposed on Energy Drinks That Have

question 75

Multiple Choice

Suppose a tax is imposed on energy drinks that have a price elasticity of demand equal to 2,and a price elasticity of supply equal to 1.We would expect that

• A) the producers of energy drinks containing sugar would pay a larger portion of the tax.
• B) the consumer would pay a larger portion of the tax.
• C) the consumer would pay the entire tax.
• D) the producers of energy drinks containing sugar would pay the entire tax.

---

Definitions:

Labor Rate Variance

A measure used in accounting to calculate the difference between the actual cost of labor and the expected (or standard) cost.

Direct Labor Cost

The total expense of paying for the labor of employees directly involved in manufacturing a product or delivering a service.

Budgeted Direct Labor Cost

The estimated cost of labor directly involved in the production process, as planned in the budget.

Labor Rate Variance

The difference between the actual cost of direct labor and the estimated cost, indicating how well labor costs were controlled.