Figure 8-7 the Vertical Distance Between Points a and B Represents a Represents

question 488

Multiple Choice

Figure 8-7
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-7. Suppose a 20th unit of the good were sold by a seller to a buyer. Which of the following statements is correct?

• A) For the 20th unit, the difference between the buyer's value and the seller's cost is less than the tax per unit.
• B) For the 20th unit, the difference between the buyer's value and the seller's cost is greater than the tax per unit.
• C) For the 20th unit, the difference between the buyer's value and the seller's cost is equal to the tax per unit.
• D) It makes sense for the buyer to buy and for the seller to sell the 20th unit, with or without the tax in place.

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Definitions:

Current Ratio

Measures a company's ability to pay short-term obligations with its short-term assets.

Market Ratio

A financial ratio used to evaluate the performance, value, and profitability of a company within the marketplace.

Book Ratio

A financial ratio that compares a company's book value to some other indicator, often used in the context of a price-to-book ratio.

Inventory Turnover

A financial ratio indicating how many times a company has sold and replaced inventory over a period.