Figure 8-20

question 392

Multiple Choice

Figure 8-20. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax.

-Refer to Figure 8-20.For an economy that is currently at point D on the curve,a decrease in the tax rate would

• A) decrease consumer surplus.
• B) decrease producer surplus.
• C) increase tax revenue.
• D) increase the deadweight loss of the tax.

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Definitions:

Elastic Demand

A situation in economics where the demand for a product is sensitive to price changes, leading to a significant change in quantity demanded if the price increases or decreases.

Wage Increase

Refers to the rise in the hourly, daily, or monthly payments made to employees for their work or services.

Total Payroll

The complete amount of money a business pays to its employees over a specific period, including wages, salaries, bonuses, and deductions.

Rectangular Hyperbola

A curve representing a relationship between two variables wherein the product of the two variables is constant, commonly used in economics to describe certain elasticities.