Graphically, the Effect of a Government Subsidy on a Good

question 299

Multiple Choice

Graphically, the effect of a government subsidy on a good is shown as

• A) a leftward shift of the market demand curve.
• B) a rightward shift of the market demand curve.
• C) a downward movement along the market demand curve.
• D) no change to the market demand curve.

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Definitions:

Tax Expense

The amount of taxation a company is required to pay to various tax authorities, based on its earnings.

SUTA Tax Payable

The liability owed by employers to the state for the State Unemployment Tax Act, used to fund unemployment benefits.

Payroll Tax Expense

Payroll Tax Expense is the employer's cost associated with the employment of staff, including taxes such as social security and Medicare taxes that must be paid based on salaries.

Wages Payable

A liability account representing the amount owed to employees for work performed but not yet paid.