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:

Direct Method

In cash flow statement preparation, the Direct Method lists all major operating cash receipts and payments, showing the net cash provided by or used in operating activities.

Financial Flexibility

The ability of a company or individual to adjust its spending and capital allocation in response to changing circumstances and opportunities, ensuring financial stability and the potential for growth.

Liquidity

The capacity of an asset to be rapidly transformed into cash without notably influencing its market value.

Operating Capability

An indicator of a company's ability to maintain or improve its level of operations and profitability over time.