Refer to the Graph Shown

question 33

Multiple Choice

Refer to the graph shown. Given the same supply elasticity, the burden of a 10 percent tax would be borne the most by the consumer in segment:

• A) AB.
• B) BC.
• C) CD.
• D) DE.

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Definitions:

Break-even Point

The level of sales at which total revenues equal total costs, resulting in no profit or loss for the business.

Variable Expenses

Costs that change in proportion to the activity or volume of operations in a business, such as raw materials and labor costs.

Fixed Expenses

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance premiums.

Contribution Margin Ratio

The proportion of sales revenue that exceeds variable costs, indicating how much revenue contributes to fixed costs and profit.