Use the Figure Below to Answer the Following Question(s)

question 4

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 4-7
-Refer to Figure 4-7. The supply curve S₁ and the demand curve D indicate initial conditions in the market for gasoline. A $.60-per-gallon excise tax on gasoline is levied, which shifts the supply curve from S₁ to S₂. Which of the following states the actual burden of the tax?

• A) $.50 for buyers and $.10 for sellers
• B) $.50 for sellers and $.10 for buyers
• C) The entire $.60 falls on sellers.
• D) The entire $.60 falls on buyers.

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Definitions:

Net Present Value

A financial metric that calculates the value of a project or investment in terms of its present value of net cash inflows minus the present value of its costs.

Cash Payback Period

The length of time it takes for an investment or project to generate enough cash flows to recover its initial cost.

Present Value Factor

The present value factor is a factor used to calculate the present value of a future amount, considering a specific interest rate over a set period.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts.