A 3 Cents Per-Unit Tax on Bread Leads to No

question 64

Multiple Choice

A 3 cents per-unit tax on bread leads to no change in the quantity bought and sold.The tax is paid

• A)completely by the sellers.
• B)completely by the buyers.
• C)equally by the buyers and sellers.
• D)mostly but not completely by the buyers.
• E)completely by either the sellers or the buyers;we cannot tell without more information.

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Definitions:

Break-Even Time

The period it takes for a business or project to recover its costs, reaching a financial break-even point.

Payback Period

The payback period is the time it takes for an investment to generate cash flows sufficient to recover its initial cost.

Net Present Value

A calculation that compares the present value of cash inflows to the present value of cash outflows over a period of time, used to assess the profitability of an investment.

Payback Period Method

A simple calculation that divides the initial investment by the annual cash inflows to determine how long it will take to recoup the initial investment.