Figure 8-10 the Vertical Distance Between Points a and B Represents the Represents

question 303

Multiple Choice

Figure 8-10
The vertical distance between points A and B represents the original tax.
-Refer to Figure 8-10.The original tax can be represented by the vertical distance AB.Suppose the government is deciding whether to lower the tax to CD or raise it to FG.Which of the following statements is correct?

• A) Compared to the original tax,the larger tax will decrease both tax revenue and deadweight loss.
• B) Compared to the original tax,the smaller tax will increase both tax revenue and deadweight loss.
• C) Compared to the original tax,the larger tax will decrease tax revenue and increase deadweight loss.
• D) Both a and b are correct.

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Definitions:

Annual Report

A comprehensive report detailing a company's activities, financial performance, and operations over the previous financial year.

Interim Financial Statements

Financial reports that are issued for periods of time shorter than the company's full fiscal year, intended to provide an update on the company's financial progress.

Interim Accounting Procedures

The processes and practices used to prepare financial statements for periods shorter than a fiscal year, such as quarterly reports.

Year-End

The end of an accounting period, either the calendar year or a company's fiscal year, at which time various financial statements are prepared.