Online Retailers That Have a Physical Presence Within a State

question 8

Multiple Choice

Online retailers that have a physical presence within a state must collect state taxes on any Web sales made to residents of that state. Sell2U.com Inc., an online retailer based in California, pays Tracker Web Services, which is located within New York, to direct traffic to Sell2U.com's site. If Sell2U.com must collect and remit taxes on its sales to New York residents, it is most likely because

• A)Sell2U.com's deal with Tracker falls within New York's definition of physical presence.
• B)Congress has explicitly chosen to tax Internet sales.
• C)the United States Supreme Court has ruled that a state can compel an out-of-state business to collect and remit state taxes.
• D)New York requires its residents to self-report their purchases and pay use taxes to the state.

Describe how consumer and producer surpluses are affected by government interventions in markets.

Recognize the role of government interventions, such as licenses and medallions, in regulating markets.

Evaluate the consequences of government-imposed quantity controls on market efficiency and surplus.

Explain the concepts of demand price, supply price, and how they determine market equilibrium.

---

Definitions:

Degree of Total Leverage

A financial ratio that measures the sensitivity of a company's earnings per share to fluctuations in its operating income, considering both operating and financial leverage.

Financial Risk

The possibility of losing money on an investment or business venture, including various types of risks like market risk, credit risk, and operational risk.

Business Risk

The exposure a company or investor faces due to uncertainties in the operating environment, impacting its profitability.

Contribution Margin

The selling price per unit, minus the variable cost per unit, indicating the contribution towards covering fixed costs and profit.