When Taxes Are Imposed on a Commodity

question 321

Multiple Choice

When taxes are imposed on a commodity,

• A)there is never a deadweight loss.
• B)some consumers alter their consumption by not purchasing the taxed commodity.
• C)tax revenue will rise by the amount of the tax multiplied by the before-tax level of consumption.
• D)the taxes do not distort incentives.

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Definitions:

Direct Materials

Raw materials that are directly incorporated into a finished product and can be directly traced to that product.

Traditional Format Income Statements

A type of financial statement that presents the revenues, expenses, and profits or losses of a company over a specific period, formatted in a conventional manner.

Factory Supervisor

An individual responsible for overseeing the operations and workers in a factory, ensuring production targets and quality standards are met.

Wages

Payments made to employees for their labour or services, typically calculated on an hourly, daily, or weekly basis.