If the Government Institutes a Specific Tax for a Good

question 48

Multiple Choice

If the government institutes a specific tax for a good,

• A)the producer simply passes the entire tax on to the consumer.
• B)the producer must absorb the entire tax.
• C)the producer can generally only pass part of the tax onto the consumer.
• D)the equilibrium price drops.

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Definitions:

Direct Labor Rate Variance

The difference between the actual cost of labor and the expected (or standard) cost, used in budgeting and cost management.

Actual Costs

The expenses that a company has truly incurred as opposed to estimated or budgeted amounts.

Standard Costs

Predetermined costs for products or services, used as a benchmark to measure actual performance and manage budgets.

Direct Materials

Raw materials that can be directly attributed to the production of specific goods or products, unlike indirect materials which cannot be directly linked to production.