The Excise Tax on Gasoline Is Based on the Ability-To-Pay

question 134

True/False

The excise tax on gasoline is based on the ability-to-pay principle of taxation.

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Definitions:

Margin Of Safety

The difference between actual sales and the break-even point. It measures how much sales can fall before a business incurs a loss.

Variable Costs

Expenditures that adjust based on the degree of operational activity or the volume of goods manufactured.

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales activities.

Contribution Margin Ratio

A metric that shows what percentage of sales revenue is available to cover variable costs and contribute to fixed costs after all variable expenses have been covered.