Suppose There Is Currently a Tax of $50 Per Ticket

question 145

Multiple Choice

Suppose there is currently a tax of $50 per ticket on airline tickets.Buyers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then the

• A) demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20.
• B) demand curve will shift upward by $20, and the price paid by buyers will decrease by $20.
• C) supply curve will shift downward by $20, and the effective price received by sellers will increase by less than $20.
• D) supply curve will shift downward by $20, and the effective price received by sellers will increase by $20.

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Definitions:

FUTA Tax Credit

A credit against Federal Unemployment Tax Act (FUTA) tax liability that employers can claim for amounts paid into state unemployment funds.

Life Insurance

A contract providing payment to designated beneficiaries upon the insured person’s death, offering financial protection against the loss of income.

Health Insurance

A type of insurance coverage that pays for medical and surgical expenses incurred by the insured or reimburses them for expenses from illnesses or injuries.

Workers' Compensation Insurance

Insurance that provides medical benefits and wage replacement to employees injured on the job.