Refer to the Above Supply and Demand Graph

question 102

Multiple Choice

Refer to the above supply and demand graph.In the graph,point A is the current equilibrium level of output of this product and point B is the optimal level of output from society's perspective.S is the supply curve without a tax and S_t is the supply curve with a tax.This figure indicates that there is (are) :

• A) positive externalities created in the production of this product.
• B) negative externalities created in the production of this product.
• C) an underallocation of resources to product production.
• D) a surplus of the good produced.

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Definitions:

Child Tax Credit

A tax credit offered by the government which reduces tax liability for taxpayers with dependent children.

AGI

The Adjusted Gross Income is a figure obtained from your gross earnings, serving the purpose of determining the taxable part of your income.

Single

A filing status for individuals not married, divorced, or legally separated, affecting the tax rates and deductions they qualify for.

Child Tax Credit

A tax credit available to taxpayers for each qualifying dependent child, aimed at reducing the taxpayer's liability on a dollar-for-dollar basis.