A Tax Wedge

question 150

Multiple Choice

A tax wedge:

• A) refers to the difference in the price the buyer pays and the price the seller keeps.
• B) refers to the shift in supply or demand that results from a tax.
• C) only occurs in markets when the tax is placed on buyers.
• D) only occurs in markets when taxes are placed on large corporations.

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Definitions:

Stock Investments

Financial assets consisting of stakes in companies through the purchase of common or preferred stock shares, with the expectation of earning dividends or capital gains.

Net Income

The amount of money that remains after all operating expenses, taxes, and dividends have been paid, representing the company's profit.

Cost Method

An accounting method used to value inventory or assets, based on the price paid to acquire them.

Stock Investments

Financial assets representing shares of ownership in a corporation, which may provide dividends and capital gains to the investor.