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

question 4

Multiple Choice

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

-Refer to Figure 8-17.The original tax can be represented by the vertical distance AB.Suppose the government is deciding whether to lower the tax to CD or raise it to FG.Which of the following statements is not correct?

• A) Compared to the original tax, the larger tax will increase tax revenue.
• B) Compared to the original tax, the smaller tax will decrease deadweight loss.
• C) Compared to the original tax, the smaller tax will decrease tax revenue.
• D) Compared to the original tax, the larger tax will increase deadweight loss.

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Definitions:

Entire Industry Supply

The total quantity of a specific good or service that is available to consumers from all producers in a particular industry.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded, typically downward sloping to the right.

Corporate Hierarchy

A structure in corporations that defines the levels of authority, roles, and responsibilities from top management to lower-level employees.

Natural Monopoly

A natural monopoly occurs when a single firm can supply the entire market at a lower cost than could be achieved by multiple firms due to economies of scale.