If There Was an Increase in the Excise Tax Imposed

question 288

Multiple Choice

If there was an increase in the excise tax imposed on beer suppliers, what would be the effect on the equilibrium price and quantity of beer?

• A) price increases; quantity decreases
• B) price decreases; quantity decreases
• C) price increases; quantity increases
• D) price decreases; quantity increases

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Definitions:

Market Price

Today's price for buying or selling a service or asset within the marketplace.

Equity Multiplier

is a financial ratio indicating the proportion of the company’s assets financed by stockholders' equity, showing leverage.

Balance Sheet

A balance sheet that portrays a company's financial standing in terms of assets, liabilities, and the equity of its shareholders at a particular point.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, ending with the net income or loss for the period.