A Unit Tax of $1 Has Been Levied on a Good

question 116

Multiple Choice

A unit tax of $1 has been levied on a good. The equilibrium price of the good will most likely

• A)increase by $1.
• B)remain unchanged.
• C)decrease by $1.
• D)increase by an amount less than $1.

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Definitions:

Materials Price Variance

The difference between the actual cost of materials and the expected cost, multiplied by the amount of materials purchased.

Standard Price

A predetermined cost that companies use to value inventory and cost of goods sold, often used in budgeting and performance evaluation.

Actual Price

The real or market price at which an asset or service is bought or sold.

Materials Price Variance

Materials price variance is the difference between the actual cost of materials used in production and the expected (or standard) cost, indicating efficient materials purchasing.