Figure 18-2 Figure 18-2 Shows a Demand Curve and Two

question 46

Multiple Choice

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold

• A) the deadweight loss is identical under either supply curve.
• B) the deadweight loss is greater under the supply curve S₁.
• C) the deadweight loss is greater under the supply curve S₀.
• D) there is no deadweight loss since revenue raised is used to fund government projects.

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Definitions:

Accounts Receivable

Funds that customers owe to a company for products or services that have been provided but not yet compensated for.

Wages Expense

An accounting term for the total cost incurred by a company to compensate its employees, shown on the income statement.

Service Revenue

Income earned by a company for the services it provides to its customers.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, often referred to as shareholders' equity.