Suppose That a Firm Has to Pay a 10% Tax

question 4

Multiple Choice

Suppose that a firm has to pay a 10% tax on its total revenue.This has the effect of ?

• A)flattening marginal cost.
• B)increasing marginal revenue.
• C)decreasing marginal cost.
• D)decreasing marginal revenue.

---

Definitions:

Principal

The original sum of money borrowed in a loan, or the amount of the investment, not including the interest or profits.

Agency Relationship

A legal bond where one party, the agent, acts on behalf of another, the principal, in dealings with third parties.

Financial Year End

Financial year end is the completion of a one-year, or 12-month, accounting period; the date when companies must finalize their financial statements and report their financial performance.

Reasonable Period

A span of time that is considered fair and appropriate in a given context, especially in legal and contractual situations.