Draw Another Supply Curve S to Indicate a $1 Tax

question 95

Essay

Draw another supply curve S to indicate a $1 tax increase. (a) How much of this tax is borne by the buyer? (b) How much of this tax is borne by the seller?

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Definitions:

Bad Debts Expense

An expense reported on the income statement reflecting the cost of estimated uncollectible accounts receivable.

Net Credit Sales

Sales made on credit minus any sales returns or allowances, reflecting the actual credit sales revenue.

Uncollectible Accounts

Debts owed to a company that are considered to be uncollectable and are therefore written off as a bad debt expense.

Estimated Uncollectible

An accounting term referring to the portion of accounts receivable that a company does not expect to collect.