Figure 8-19 the Vertical Distance Between Points a and B Represents the Represents

question 38

Multiple Choice

Figure 8-19
The vertical distance between points A and B represents the original tax.
-Refer to Figure 8-19.If the government changed the per-unit tax from $5.00 to $7.50,then the price paid by buyers would be $10.50,the price received by sellers would be $3,and the quantity sold in the market would be 0.5 units.Compared to the original tax rate,this higher tax rate would

• A)increase government revenue and increase the deadweight loss from the tax.
• B)increase government revenue and decrease the deadweight loss from the tax.
• C)decrease government revenue and increase the deadweight loss from the tax.
• D)decrease government revenue and decrease the deadweight loss from the tax.

---

Definitions:

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, often used to assess liquidity and cash requirements.

Financing Section

A part of the cash flow statement that shows the net flows of cash used to fund the company’s capital expenditures and financial investments.

Budgeted Income Statement

The Budgeted Income Statement is a financial forecast that projects a company’s revenues, expenses, and net income for a specific period.

Accrual Basis

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.