Refer to the Graph Shown

question 71

Multiple Choice

Refer to the graph shown. Initially, the market is in equilibrium with price equal to $3 and quantity equal to 100. Government imposes a tax on suppliers of $1 per unit. The effect of the tax is to:

• A) raise the price consumers pay from $3 to $4.
• B) lower the price consumers pay from $3 to $2.
• C) raise the price sellers keep after paying the tax.
• D) lower the price sellers keep after paying the tax.

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Definitions:

Modified Adjusted Gross Income

An individual's AGI with certain deductions added back in; used to determine eligibility for certain tax benefits.

Head of Household

A tax filing status for unmarried taxpayers who provide more than half the cost of maintaining a home for a qualifying person.

Adoption Credit

A tax credit offered to adoptive parents to cover some of the costs associated with the legal adoption of a child.

Special Rules

Regulations or provisions that apply in specific situations, often modifying or exempting certain transactions or entities from the general rules of tax law.