(Figure: Changing Tax Rates Alpha) in the Figure, Suppose That

question 86

Multiple Choice

(Figure: Changing Tax Rates Alpha) In the figure, suppose that the tax rate is changed so that the market moves from the graph on the left to the graph on the right. This change would likely:

• A) decrease tax revenue and decrease deadweight loss.
• B) decrease tax revenue and increase deadweight loss.
• C) increase tax revenue and decrease deadweight loss.
• D) increase tax revenue and increase deadweight loss.

---

Definitions:

Dividends

Funds disbursed by a company to its shareholders, representing a share of the profits earned by the company.

Total Liabilities

The sum of all financial obligations a company owes to outside parties.

Expenses

Costs incurred by a business in the process of earning revenue, including operational costs, salaries, and utilities.

Retained Earnings

Part of a company's profit that is held or retained and saved for future use, reinvestment, or to pay debt rather than being paid out as dividends to shareholders.