Suppose There Is Currently a Tax of $50 Per Ticket

question 147

Multiple Choice

Suppose there is currently a tax of $50 per ticket on airline tickets.Buyers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then the

• A)demand curve will shift upward by $20,and the effective price received by sellers will increase by $20.
• B)demand curve will shift upward by $20,and the effective price received by sellers will increase by less than $20.
• C)supply curve will shift downward by $20,and the price paid by buyers will decrease by $20.
• D)supply curve will shift downward by $20,and the price paid by buyers will decrease by less than $20.

---

Definitions:

Cash Dividends

Payments made by a corporation to its shareholder members as a distribution of profits.

Net Cash

The total amount of cash and cash equivalents a company possesses after subtracting all its cash outflows from its cash inflows.

Operating Activities

Activities that relate to the primary operations of a company, such as selling, general, and administrative activities, as well as the production of goods and services.

Free Cash Flow

The amount of cash a company generates after accounting for capital expenditures needed to maintain or expand the asset base.