Figure 8-7 the Vertical Distance Between Points a and B Represents a Represents

question 94

Multiple Choice

Figure 8-7
The vertical distance between points A and B represents a tax in the market.

-Refer to Figure 8-7.Which of the following statements is correct?

• A) Total surplus before the tax is imposed is $45.
• B) After the tax is imposed, consumer surplus is 25 percent of its pre-tax value.
• C) After the tax is imposed, producer surplus is 36 percent of its pre-tax value.
• D) All of the above are correct.

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Definitions:

Net Collection Float

The difference between check deposits recorded in the book balance and the amount of checks that have actually been cleared or credited to the bank account.

Outstanding Cheques

Cheques issued by a company that have not been deposited or cashed by the recipient by the end of the accounting period.

Liquidity

The ease with which an asset can be converted into cash without significantly affecting its price, reflecting the ability of a company or individual to meet immediate and short-term obligations.

Precautionary Motive

The desire to hold cash or other liquid assets to meet unexpected needs and financial emergencies.