The Graph Shown Demonstrates a Tax on Buyers

question 23

Multiple Choice

The graph shown demonstrates a tax on buyers. Which of the following can be said about the effect of this tax?

• A) The tax creates a shortage, and rationing must occur.
• B) The tax creates excess supply and the government must buy the excess.
• C) The tax creates a shortage, and the government must regulate the market.
• D) None of these are correct.

---

Definitions:

Asset-Based Borrowings

Loans secured by a company's assets, where the borrowing capacity is based on the value of the collateralized assets.

Financial Foundation

The basic financial resources, systems, and principles that support and sustain an individual's or organization’s economic stability and growth.

Equity Dilution

The decrease in existing shareholders' ownership percentages of a company as a result of the company issuing more shares.

Entrepreneurial Finance

The study and practice of financial management and funding strategies specific to entrepreneurship and startups.