Figure 8-17 the Vertical Distance Between Points a and B Represents the Represents

question 209

Multiple Choice

Figure 8-17
The vertical distance between points A and B represents the original tax.

-Refer to Figure 8-17.If the government changed the per-unit tax from $5.00 to $2.50,then the price paid by buyers would be $7.50,the price received by sellers would be $5,and the quantity sold in the market would be 1.5 units.Compared to the original tax rate,this lower tax rate would

• A) increase government revenue and increase the deadweight loss from the tax.
• B) increase government revenue and decrease the deadweight loss from the tax.
• C) decrease government revenue and increase the deadweight loss from the tax.
• D) decrease government revenue and decrease the deadweight loss from the tax.

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Definitions:

Gross Profit

The financial performance metric that subtracts the cost of goods sold (COGS) from revenue, indicating how efficiently a company produces or sources its products.

Gross Margin

The difference between sales revenue and cost of goods sold, shown as a value or percentage, indicating the efficiency of sales relative to production costs.

Gross Sales

Gross sales represent the total sales revenue of a company without any deductions for returns, allowances, or discounts.

Periodic Inventory System

A method of inventory accounting where updates to inventory levels are made periodically at the end of an accounting period, rather than continuously.