Which Statement About Taxes Is INCORRECT

question 89

Multiple Choice

Which statement about taxes is INCORRECT?

• A) Taxes in markets always cause deadweight losses.
• B) If the good causes an external cost, taxes actually reduce deadweight loss.
• C) Both taxes and tradable allowances in a market that has external costs can lead to the efficient quantity.
• D) Taxes on producers cause the supply curve for the product to shift to the left.

---

Definitions:

Indirect Method

A way of calculating cash flows from operating activities by starting with net income and adjusting for changes in non-cash accounts.

Cash Flows

The total amount of money being transferred into and out of a business, particularly affecting liquidity, investment, and operating activities.

Investing Section

Part of a company's cash flow statement that shows the cash spent on or generated from investment activities, such as buying or selling assets.

Bonds

Fixed income investments representing a loan made by an investor to a borrower, typically corporate or governmental.