Starting with AD₁ and AS₁ in the Graph Below, If

question 11

Multiple Choice

Starting with AD₁ and AS₁ in the graph below, if taxes increase, then in the short run:
Graph 14-1

• A)output stays the same and prices fall
• B)output increases and prices rise
• C)output increases and prices fall
• D)output decreases and prices rise
• E)output decreases and prices fall

---

Definitions:

Departmental Predetermined Overhead Rates

A method of calculating overhead rates for specific departments within a company, rather than using a single overhead rate for the entire organization.

Machine-Hours

A measure of production output or operational time, calculated by the number of hours a machine is run during a specific period.

Markup

A pricing strategy where a seller adds to the cost of the goods to determine the selling price, aimed at ensuring a profit margin above cost.

Selling Prices

The actual amount that a customer pays for a product or service, which can include discounts, promotions, and taxes.