When Comparing a "Pre-Tax Cost" and an "After-Tax Cost", Which

question 12

Multiple Choice

When comparing a "pre-tax cost" and an "after-tax cost", which of the following is true?

• A) The after-tax cost will be greater than the pretax cost.
• B) They will be the same amount.
• C) The pre-tax cost will be greater than the after-tax cost.
• D) The higher the tax rate, the lower the difference in the amount between them.

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Definitions:

Accounting Costs

The explicit costs of running a business, such as wages, rent, and materials, recorded in the financial statements.

Total Revenue

The total amount of money received by a firm from sales of its products or services before any expenses are subtracted.

Average Product

The output per unit of input, for example, the average quantity of product produced per worker or per machine.

Marginal Product

The additional output that results from using one more unit of a variable input, holding all other inputs constant.