The Demand Curve for Pizza Is Downward Sloping and the Supply

question 12

Multiple Choice

The demand curve for pizza is downward sloping and the supply curve is upward sloping. If the government imposes a $2 tax on a pizza, ________ the tax.

• A)only consumers pay
• B)only producers pay
• C)both producers and consumers pay
• D)neither producers nor consumers pay
• E)the government pays

---

Definitions:

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Net Operating Income

A measure of a company's profitability, calculated by subtracting operating expenses from operating revenues, excluding taxes and interest.

EBIT

A financial performance metric that calculates a company's profits before accounting for interest and income tax costs, including all other expenses.

Asset Beta

A measure of the sensitivity of a particular asset's returns to the returns of the overall market, indicating its risk relative to the market.