The Difference Between a Tax and a Subsidy Is That

question 45

Multiple Choice

The difference between a tax and a subsidy is that when the government places a tax on a good,it ________ the equilibrium price and ________ the equilibrium quantity,whereas when the government places a subsidy on a good,it ________ the equilibrium price and ________ the equilibrium quantity.

• A) increases; decreases; decreases; increases
• B) increases; decreases; decreases; decreases
• C) decreases; decreases; increases; increases
• D) decreases; increases; increases; decreases
• E) increases; does not change; does not change; increases

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Definitions:

Working Capital

The difference between a company's current assets, like cash and accounts receivable, and its current liabilities, such as accounts payable, representing the short-term financial health and operational efficiency of a company.

Good Faith

Good Faith refers to an honest intention to act without taking an unfair advantage over another party, often assumed in the context of negotiations or business dealings.

Liability

A financial obligation or debt that an individual or company owes.

Advisors

Experienced professionals who provide expert advice and guidance in specific areas of business, finance, or other fields to individuals or organizations.