The Total Welfare Associated with a Market That Includes a Government

question 79

Multiple Choice

The total welfare associated with a market that includes a government sales tax equals

• A) consumer surplus plus producer surplus.
• B) consumer surplus plus producer surplus minus government tax revenue.
• C) consumer surplus plus producer surplus plus government tax revenue.
• D) the government tax revenue.

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Definitions:

Merchandise Inventory

The goods a retail or wholesale company intends to sell to customers for a profit.

Income Summary

The Income Summary is an account in the ledger that aggregates all revenues and expenses for a period, transferring the net result to owner's equity.

Permanent Accounts

Accounts that carry their ending balances over to the next accounting period. Examples include assets, liabilities, and equity accounts.

Post-closing Trial Balance

A listing of all active general ledger accounts with their balances after closing entries are made, serving as a check to ensure debits equal credits before beginning a new accounting period.