If an Excise Tax Is Imposed on Automobiles and Collected

question 238

Multiple Choice

If an excise tax is imposed on automobiles and collected from consumers:

• A) the demand curve will shift downward by the amount of the tax.
• B) the supply curve will shift upward by the amount of the tax.
• C) the equilibrium quantity supplied will increase relative to the pretax level.
• D) the equilibrium quantity demanded will increase relative to the pretax level.

---

Definitions:

Paychecks

Documents issued to employees to pay for their services, representing the net amount after deductions like taxes and retirement contributions.

Notes Payable

Financial obligations represented by written promises to pay specified amounts of money at future dates.

Accounts Payable

Liabilities representing amounts owed by a company to suppliers for goods and services purchased on credit.

Journal Entry

A record in the accounting journals that documents a financial transaction.