Suppose That a Firm Has to Pay a 10% Tax

question 1

Multiple Choice

Suppose that a firm has to pay a 10% tax on revenue.The profit-maximizing level of output is ?

• A)unaffected by the tax.
• B)increased because of the tax.
• C)decreased because of the tax.

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Definitions:

Materials

Items or substances from which something is made or can be made, often used in the context of production or manufacturing.

FIFO Method

The First-In, First-Out (FIFO) method is an inventory valuation strategy where the oldest inventory items are recorded as sold first.

Equivalent Units

A concept used in process costing that converts partially completed units into a number of fully completed units, based on the percentage completion of those units.

Conversion

The process of changing raw materials into finished products or turning prospects into customers, depending on the context.