Which of the Following Is a Correct Statement About Markets

question 146

Multiple Choice

Which of the following is a correct statement about markets for prohibited goods?

• A) Penalising either buyers or sellers of an illegal good decreases the quantity bought.
• B) Penalising sellers of an illegal good decreases supply and penalising buyers decreases demand.
• C) Taxing a good at a sufficiently high rate can achieve the same consumption level as prohibition.
• D) All of the above are correct statements.

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid, regardless of when the transaction occurred.

Financial Statements

Papers presenting a snapshot of a firm's financial health, which include the balance sheet, income statement, and cash flow statement.

Accurate

The quality of being precise, correct, and free from errors.

Adjust Expense

The process of allocating expenses incurred in one period to the correct period, often through adjusting entries in the accounting records.