Suppose a Tax Is Levied on the Buyers of a Good;

question 235

Multiple Choice

Suppose a tax is levied on the buyers of a good;

• A)then the supply curve shifts upward by the amount of the tax.
• B)then the quantity supplied decreases for all conceivable prices of the good.
• C)this means that the buyers of the good will send tax payments to the government.
• D)this means that the buyers of the good will pay a higher effective price for the good, not that they will send tax payments to the government.

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Definitions:

Flotation Costs

Expenses incurred by a company in issuing new securities, including underwriting, legal, registration, and printing fees.

Expected Inflation

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling, as anticipated by consumers, investors, and economists.

Cost of Capital

The Cost of Capital is the cost of a company's funds (both debt and equity), or, from an investor's point of view, the required rate of return on a portfolio company's existing securities.

Specific Financing

Financing that is intended for a particular purpose or project, with clear specifications and usually backed by specific collateral.