In Addition to Tax Payments, the Two Other Primary Costs

question 101

Multiple Choice

In addition to tax payments, the two other primary costs that a tax system inevitably imposes on taxpayers are

• A)deadweight losses and administrative burdens.
• B)deadweight losses and frustration with the political system.
• C)administrative burdens and tax-preparation costs.
• D)administrative burdens and the risk of punishment for failure to comply with tax laws.

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Definitions:

Average Cost

The total cost of production divided by the number of units produced, indicating the cost per unit.

Fixed Costs

Costs that do not vary with the level of production or business activity, such as rent, salaries, and insurance.

Variable Costs

Costs that change in proportion to the level of production or business activity.

Shut Down

The process of ceasing operations, often temporarily, as a strategic or economic decision by a business.