A Policy Maker Has Argued for Higher Taxes on Gasoline

question 28

Multiple Choice

A policy maker has argued for higher taxes on gasoline to reduce the negative externalities associated with driving. This policy will lead to a relatively ________ reduction in driving if demand is ________.

• A)small; perfectly elastic
• B)large; perfectly inelastic
• C)small; relatively inelastic
• D)large; relatively inelastic

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Definitions:

Costs Accounted For

The total costs assigned to completed units and units still in production, ensuring that all manufacturing costs are allocated according to the cost accounting method in use.

Beginning Work in Process Inventory

The inventory of partially finished goods at the start of an accounting period.

Equivalent Units

The product of the number of partially completed units and their percentage of completion with respect to a particular cost. Equivalent units are the number of complete whole units that could be obtained from the materials and effort contained in partially completed units.

Beginning Work in Process Inventory

The value of partially finished goods that are in production at the start of an accounting period.