As a Result of the Imposition of a Tax on a Product:​

question 42

Multiple Choice

As a result of the imposition of a tax on a product:​

• A)​some consumer surplus is transferred from buyers to producers.
• B)​some producer surplus is transferred from sellers to consumers.
• C)​some consumer and producer surplus is transferred from buyers and sellers to the government.
• D)​there is no change in either consumer or producer surplus.

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Definitions:

Leverage

The use of various financial instruments or borrowed capital to increase the potential return of an investment.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed annually, affecting loans, mortgages, and savings.

Unlevered Cost

The cost of an investment that does not take into account the effect of debt in the capital structure.

After-Tax Net

The net income of an individual or business after all taxes have been deducted, representing the amount of money actually available for spending or investment.