Which of the Following Statements Is Correct Regarding a Tax

question 53

Multiple Choice

Which of the following statements is correct regarding a tax on a good and the resulting deadweight loss?

• A)The greater are the price elasticities of supply and demand,the greater is the deadweight loss.
• B)The greater is the price elasticity of supply and the smaller is the price elasticity of demand,the greater is the deadweight loss.
• C)The smaller are the decreases in quantity demanded and quantity supplied,the greater the deadweight loss.
• D)The smaller is the wedge between the effective price to sellers and the effective price to buyers,the greater is the deadweight loss.

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Definitions:

Acquisition

The process by which a company purchases most or all of another firm's shares to gain control of that company.

Additional Paid-in Capital

Additional paid-in capital represents the amount investors have paid for shares above the nominal value during public offerings or private placements.

Date of Acquisition

The specific date on which an asset is purchased or acquired by an entity.

Par Value

The nominal or face value of a bond, share of stock, or coupon as stated by the issuer, which is often a minimal amount that bears no relation to its market price.