Use the Figure Below to Answer the Following Question(s)

question 312

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 4-9

Refer to Figure 4-9. The market for gasoline was initially in equilibrium at point b . If a $.40 excise tax was imposed,

• A) the supply of gasoline would shift to S ₂.
• B) the price of gasoline to consumers would increase from $1.20 per gallon to $1.40 per gallon.
• C) the net price received by producers of gasoline would decline from $1.20 per gallon to $1.00 per gallon.
• D) all of the above would occur.

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Definitions:

Fixed Costs

Rephrased: Expenses that remain constant regardless of the amount of goods or services produced by a business.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and direct labor.

Budgeted Net Income

The projected net income for a future period, based on expected revenues and expenses.

Variable Expenses

Expenses directly linked to the volume of output, adjusting in accordance with business activity levels.