Which of the Following Is Not a Reason That Tax

question 49

Multiple Choice

Which of the following is not a reason that tax revenue might fall at very high tax rates?

• A)People have a greater incentive to practice tax avoidance.
• B)Government officials fail to enforce tax laws.
• C)People tend to commit more tax evasion.
• D)People work less in the case of a personal income tax.
• E)Corporations inflate expenses in the case of a corporate income tax.

---

Definitions:

Break-even Point

The point at which total revenue equals total costs, and no profit is earned or lost, often used to determine the feasibility of a business venture or product.

Unit Variable Expenses

Costs that vary directly with the production volume, calculated on a per-unit basis.

Fixed Expenses

Costs that do not vary with the level of production or sales, such as rent, salaries, or utilities.

Profit

The financial gain achieved when the revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain those activities.