Table 12-4 -Refer to Table 12-4.Suppose That the Government Imposes a $2

question 32

Multiple Choice

Table 12-4

-Refer to Table 12-4.Suppose that the government imposes a $2 tax on delights,causing the price to increase from $4.00 to $6.00.Total consumer surplus

• A) falls by less than the tax revenue generated.
• B) falls by more than the tax revenue generated.
• C) falls by the same amount as the tax revenue generated.
• D) will not fall since Jennifer will no longer be in the market.

---

Definitions:

Ordinary Assets

Assets that are held for sale in the ordinary course of a business or are otherwise not capital assets, including inventory and property used in a trade or business.

Inventory

Goods and materials held by a business for the purpose of sale or production.

Trade or Business

Trade or Business refers to any activity conducted for profit or livelihood, including goods and services production, buying, selling, or providing services.

Ordinary Loss

A loss incurred in the regular operation of a business or the sale of assets used in the business that can be fully deducted in the year it occurs.