Figure 8-9 the Vertical Distance Between Points a and C Represents a Represents

question 101

Multiple Choice

Figure 8-9
The vertical distance between points A and C represents a tax in the market.
-Refer to Figure 8-9.The total surplus without the tax is

• A)$8,000.
• B)$12,000.
• C)$20,000.
• D)$40,000.

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Definitions:

Capital Structure

refers to the mix of debt and equity financing that a company uses to fund its operations and growth.

Financial Leverage

Utilizing borrowed money to amplify the potential gains from an investment, but also elevating the risk of incurring losses.

DFL

Degree of Financial Leverage; a ratio that measures the sensitivity of a company's earnings per share to fluctuations in its operating income, based on its capital structure.

EBIT

EBIT stands for Earnings Before Interest and Taxes, a measure of a firm’s profitability that excludes interest and income tax expenses.