Which of the Following Statements Is TRUE? a Tax and Subsidy

question 123

Multiple Choice

Which of the following statements is TRUE? A tax and subsidy are similar in that:
I. they both create a deadweight loss.
II. the burden of the tax and benefit of the subsidy depend on relative elasticities of demand and supply.
III. they both change the equilibrium level of output.

• A) I only
• B) I and II only
• C) I, II, and III
• D) I and III only

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Definitions:

FLSA

The Fair Labor Standards Act, which sets standards for wages, overtime pay, and employment of minors in the United States.

Overtime

Additional hours worked beyond the standard work schedule, often compensated at a higher pay rate.

Productivity Targets

Specific goals set by an organization to measure and increase the efficiency of its outputs relative to inputs over a given period.