When a Tax Is Imposed on a Good

question 327

Multiple Choice

When a tax is imposed on a good,

• A) the supply curve for the good always shifts.
• B) the demand curve for the good always shifts.
• C) the amount of the good that buyers are willing to buy at each price always remains unchanged.
• D) the equilibrium quantity of the good always decreases.

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Definitions:

Equivalent Units

A measure used in cost accounting to express the amount of work done by employees or machines in terms that allow for the comparison between completed units and units that are partially completed.

Process Costing

An accounting methodology that traces and accumulates direct costs, and allocates indirect costs, of a manufacturing process.

Conversion Costs

The combined costs of direct labor and manufacturing overheads, representing the expenses to convert raw materials into finished goods.

Equivalent Units

Equivalent units are a concept in cost accounting used to express the amount of materials or labor needed to produce a unit of output in a process that is partially complete.