A Tax That Creates an Excess Burden May Nevertheless Improve

question 34

Multiple Choice

A tax that creates an excess burden may nevertheless improve efficiency if

• A)consumption of the good has been generating beneficial externalities.
• B)consumption of the good has been generating no externalities.
• C)consumption of the good has been generating detrimental externalities.
• D)the good has been supplied by a monopolist.

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Definitions:

Adjusted Balances

Pertains to financial statements or account balances that have been modified to reflect corrections, adjustments, or reconciliations.

Accounts

Represents records in accounting that track financial transactions of various types, such as assets, liabilities, equity, expenses, and revenue.

Accumulated Depreciation

The entire value of the depreciation expense assigned to a tangible asset since its initial use.

Balance Sheet

A financial record that itemizes a company's assets, liabilities, and the equity of its shareholders at a certain moment in time.