Refer to the Graph Shown

question 148

Multiple Choice

Refer to the graph shown. Assume that the market is initially in equilibrium at a price of $6 and a quantity of 40 units. If the government imposes a $2 per-unit tax on this product, the equilibrium price will change to:

• A) $4.
• B) $5.
• C) $7.
• D) $8.

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Definitions:

W-2 Forms

Official tax documents that employers send to employees and the IRS, reporting the employee's annual wages and the amount of taxes withheld from their paycheck.

Employer's Payroll Taxes

Taxes that employers are required to pay on behalf of their employees, including Social Security and Medicare taxes.

FICA-OASDI

Federal Insurance Contributions Act - Old Age, Survivors, and Disability Insurance; a payroll tax that funds Social Security and Medicare in the United States.

FICA-Medicare

Refers to the portion of the Federal Insurance Contributions Act tax that is allocated to Medicare, funding hospital insurance benefits.