The Amount of Deadweight Loss That Results from a Tax

question 36

Multiple Choice

The amount of deadweight loss that results from a tax of a given size is determined by

• A)whether the tax is levied on buyers or sellers.
• B)the number of buyers in the market relative to the number of sellers.
• C)the price elasticities of demand and supply.
• D)the ratio of the tax per unit to the effective price received by sellers.

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Definitions:

FIFO

"First In, First Out," an inventory valuation method where the first items placed into inventory are the first sold.

LIFO

An accounting method for valuing inventory that assumes the last items produced or purchased are the first ones sold.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated as the beginning inventory plus purchases minus cost of goods sold.

Overstated

A term used to describe financial statements that report a value or condition as being higher than it actually is.