The Government Once Imposed a Luxury Tax on Very Expensive

question 116

Multiple Choice

The government once imposed a luxury tax on very expensive jewelry.This tax followed the ________ principle.

• A) benefits
• B) ability-to-pay
• C) vertical equity
• D) horizontal equity
• E) fair-tax incidence

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Definitions:

Merchandising Company

A business that purchases finished goods for resale, making a profit on the difference between the buying and selling prices.

Service Company

A business that provides intangible products (services) to consumers, as opposed to selling physical goods.

Inventory Shrinkage

The loss of products between purchase and sale due to theft, damage, or errors, resulting in lower inventory levels than recorded.

Managers

Individuals responsible for controlling or administering all or part of a company or similar organization.