An Unintended Effect of a New Tax Placed on the Producers

question 39

Multiple Choice

An unintended effect of a new tax placed on the producers of good A may include

• A) a higher price paid by the consumers of good A.
• B) less consumers' surplus for the buyers of good A.
• C) fewer workers employed in the production of good A.
• D) all of the above

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Definitions:

Overapplied

This term relates to a situation where the allocated costs in accounting exceed the actual indirect costs.

Underapplied

A situation where the allocated overhead cost is less than the actual overhead cost incurred.

Work in Process Account

An account used in accounting to track the costs associated with the production of goods that are not yet complete.

Ending Balance

The amount of money in an account at the end of a period, after all additions and subtractions have been accounted for.