In Which of the Following Examples Is Excess Burden Not

question 22

Multiple Choice

In which of the following examples is excess burden not present?

• A)Harriet decides to give up her Saturday hours at her law office after income tax rates rise.
• B)Rudolf still smokes three packs a day even after the excise tax on cigarettes rose 10 cents a pack.
• C)Wilma reduced the automatic payroll deduction to her savings account after the tax on interest was imposed.
• D)Harper decided to take a vacation in Bermuda rather than invest in stocks after the tax rate on capital gains was increased.

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Definitions:

Average Total Costs

The sum of all the production costs divided by the quantity of output produced, representing the per-unit cost of production.

Average Variable Costs

Costs that vary with the level of output, divided by the quantity of output produced, indicating the variable cost per unit.

Total Fixed Costs

The sum of all costs that remain constant regardless of the level of production or sales in a company.

Marginal Cost

The addition to total cost that results from producing one more unit of output.