When a Tax on a Good Is Enacted

question 71

Multiple Choice

When a tax on a good is enacted,

• A)buyers and sellers share the burden of the tax regardless of whether the tax is levied on buyers or on sellers.
• B)buyers always bear the full burden of the tax.
• C)sellers always bear the full burden of the tax.
• D)sellers bear the full burden of the tax if the tax is levied on them;buyers bear the full burden of the tax if the tax is levied on them.

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Definitions:

Balance Sheet

A financial statement that displays a company's financial position at a specific point in time, showing assets, liabilities, and shareholders' equity.

Revenues

The total income generated by a company from its business activities, such as the sale of goods or services, before any expenses are subtracted.

Withdrawals

Amounts of money taken out from a business by its owner(s) for personal use, reducing the equity in the business.

Statement of Owner's Equity

A financial statement that shows the changes in the equity of a sole proprietorship over a period of time.