What Is a Value-Added Tax (VAT)

question 92

Multiple Choice

What is a value-added tax (VAT) ?

• A) It is essentially a tax on profits earned by firms from the sale of goods and services.
• B) It is a tax placed on a product whenever value is added at a stage of production and at final sale.
• C) It is a tax imposed on those who supply factors of production, such as the payroll tax.
• D) It is a tax imposed on luxury goods to generate additional revenue for the government.

---

Definitions:

Weak Axiom

A less stringent version of a mathematical axiom used in economics and decision theory that deals with the consistency of consumer choices under varying circumstances.

Revealed Preference

A concept in consumer theory stating that the preferences of consumers can be revealed by their purchasing habits.

Prices

The price in money anticipated, needed, or given in exchange for a commodity.

Strong Axiom

An advanced principle or rule, often within a specific field of study, that has widespread acceptance and provides a solid foundation for further developments.