Suppose the Tax on Automobile Tires Is Increased So That

question 16

Multiple Choice

Suppose the tax on automobile tires is increased so that the tax goes from being a "medium" tax to being a "large" tax.As a result,it is likely that

• A)tax revenue increases,and the deadweight loss increases.
• B)tax revenue increases,and the deadweight loss decreases.
• C)tax revenue decreases,and the deadweight loss increases.
• D)tax revenue decreases,and the deadweight loss decreases.

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Definitions:

Management Responsibilities

The duties and tasks associated with directing and controlling an organization or one of its units, including planning, organizing, leading, and controlling.

Invest

The act of allocating resources, usually money, with the expectation of generating an income or profit.

Double Taxation

A situation where the same income is taxed twice, typically once at the corporate level and again at the personal level when distributed as dividends.

Corporation

A legal entity that is separate and distinct from its owners, who are shareholders, and has its own rights, privileges, and liabilities.