Refer to Scenario 19

question 180

Multiple Choice

Refer to Scenario 19.4 below to answer the question(s) that follow.
SCENARIO 19.4: Suppose demand for widgets is given by the equation P = 10 - 0.25Q. Originally, the price of the good is $5 per unit. When a tax of $1 per unit is imposed, the price of the good rises to $6 per unit.
-Refer to Scenario 19.4. How much total tax revenue is raised by the tax?

• A) $1
• B) $10
• C) $16
• D) $20

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Definitions:

Automatic Extension

A provision allowing taxpayers to automatically extend their deadline for submitting tax returns or other required documents, without needing to provide a reason.

Return

A financial document summarizing an entity's income, deductions, and taxes owed over a specific period, often annually.

Subchapter S Election

A tax election made by small businesses to be taxed as a pass-through entity, avoiding double taxation.

Current Year

The present calendar or fiscal year in which business operations, transactions, or tax considerations are being referenced or conducted.