Figure 8-16 -Refer to Figure 8-16. Panel A) and Panel B) Each

question 56

Multiple Choice

Figure 8-16

-Refer to Figure 8-16. Panel a) and Panel b) each illustrate a $2 tax placed on a market. In comparison to Panel b) , Panel a) illustrates which of the following statements?

• A) When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic.
• B) When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic.
• C) When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic.
• D) When supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic.

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Definitions:

Overhead Variance

The difference between the actual overhead incurred and the overhead allocated to production during a given period.

Flexible Budget

A projection of budget data for various levels of activity.

Overhead Applied

The portion of overhead costs allocated to individual products or job orders based on a predetermined rate.

Labor Price Variance

This is the difference between the actual cost of labor and the standard cost, indicating how much more or less was paid for labor than expected.