Figure 18-2 Shows a Demand Curve and Two Sets of Supply

question 234

Multiple Choice

Figure 18-2 shows a demand curve and two sets of supply curves,one set more elastic than the other.
-Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold,the government's revenue from the tax is represented by the area

• A)(PaPc × Qa)if the supply curve is S0 and (PbPc × Qb)if the supply curve is S1.
• B)(PaPd × Qa)if the supply curve is S0 and (PbPe × Qb)if the supply curve is S1.
• C)(PaPe × Qa)under either supply curve.
• D)(PbPe × Qb)under either supply curve.

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Definitions:

Company Tax Rate

The percentage of profits a company is required to pay to the government as tax.

Business Combination Valuation Entries

Journal entries that record the valuation of assets, liabilities, and contingent liabilities at fair value in a business combination.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the consumption of the asset's economic value.

Goodwill

An intangible asset that arises when a company acquires another company for a price higher than the fair value of its net assets, representing the value of the brand, customer relationships, and other intangible aspects.