When Paul Listened to the Presidential Candidate Debates,he Heard One

question 7

Multiple Choice

When Paul listened to the presidential candidate debates,he heard one candidate proposing to increase taxes and the other candidate responding that this would cause firms to decrease production.How would this be described by an economist?

• A) As taxes increase,there is a decrease in quantity supplied.
• B) As taxes increase,there is an increase in quantity supplied.
• C) As taxes increase,there is an increase in supply.
• D) As taxes increase,there is a decrease in supply.
• E) As taxes increase,there is an increase in supply and in quantity supplied.

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Definitions:

Direct Labor

Workers who are directly involved in the manufacturing of products or provision of services, whose wages are directly tied to the production process.

Work in Process

Inventory consisting of materials and labor that are partially through the manufacturing process but not yet complete.

Direct Labor

The cost of wages and other compensations for employees who are directly involved in the production of goods or services.

Fixed Manufacturing Overhead

Financial obligations that are consistent and not influenced by how much is produced or sold, like leasing costs, salaries for employees, and insurance coverages.