What Effect Does a Tax on Buyers of Coffee Have

question 154

Multiple Choice

What effect does a tax on buyers of coffee have on the equilibrium price (for buyers) and quantity

• A)It reduces the equilibrium price of coffee and increases the equilibrium quantity.
• B)It increases the equilibrium price of coffee and reduces the equilibrium quantity.
• C)It increases the equilibrium price of coffee and increases the equilibrium quantity.
• D)It reduces the equilibrium price of coffee and reduces the equilibrium quantity.

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Definitions:

Implied Duration

Estimated time that represents how long it takes for the price of a fixed-income investment to be repaid by its internal cash flows.

Business Trust

A legal arrangement where assets are managed by trustees for the benefit of the trust's beneficiaries, often used in business for tax and estate planning.

Assets

Resources owned or controlled by a business, individual, or entity which have value and can be used to meet debts, commitments, or legacies.

Profits

The financial gain obtained when the revenue from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.