Which of the Following Is an Advantage of a Value

question 25

Multiple Choice

Which of the following is an advantage of a value added tax (VAT) compared to a final tax on retail sales?

• A) The VAT may lead to higher revenue collected because even if no sales takes place, the government collects tax revenue at earlier stages of production.
• B) The VAT is a more equitable tax system because the tax burden is shared by every participant in the production process and by the final consumer.
• C) The VAT encourages productive behavior because each producer bears a smaller portion of the total tax imposed on a product.
• D) The VAT reduces a nation's trade deficit.

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Definitions:

Total Cost Line

A graphical representation of how total costs change with changes in the level of activity or production volume.

Per Unit Cost

The cost associated with a single unit of product or service, calculated by dividing total costs by the number of units produced.

Cost Formula

An equation or method used to determine the total cost of production or service delivery, incorporating variables such as labor, materials, and overhead.

Relevant Range

The range of activity or volume within which the assumptions about fixed costs, variable costs, and unit costs are valid for operations or financial modeling.