If a Tax Was Instituted Such That Every Dollar Collected

question 106

Multiple Choice

If a tax was instituted such that every dollar collected in taxes from high- income households resulted in a distribution of $0.80 to low- income households,

• A) efficiency and equality of incomes would both increase.
• B) efficiency and equality of incomes would both decrease.
• C) efficiency would increase but equality of incomes would decrease.
• D) equality of incomes would increase but efficiency would decrease.

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Definitions:

Indirect Cost

Expenses not directly tied to a specific product or service, often including administrative and facility costs.

Direct Cost

Costs that can be directly attributed to the production of a specific good or service, such as raw materials and labor.

GAAP-Adhering

Compliance with Generally Accepted Accounting Principles, which are accounting standards aimed at ensuring the financial statements of a company are transparent and consistent.

Useful Managerial Reports

Reports generated within a company to help managers make decisions regarding the company's operations.