Suppose a Tax Is Imposed on a Good

question 359

Multiple Choice

Suppose a tax is imposed on a good. This will

• A) increase the price paid by the buyer and decrease the price received by the seller.
• B) increase the price paid by the buyer but leave the price received by the seller unchanged.
• C) decrease the price received by the seller but leave the price received by the buyer unchanged.
• D) increase the price received by the seller and decrease the price paid by the buyer.

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Definitions:

Financing Activities

Transactions related to raising and repaying capital, such as issuing stocks or bonds and paying dividends.

Net Cash

The amount of cash that is available after all debts and expenses have been paid.

Investing Activities

Transactions involving the acquisition or sale of long-term assets and other investments not included in cash equivalents.

Statement Of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.