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If government increases tax rate, which aspect of business can be affected?

Answer and explanation

Correct answer: Cost and profit

The direct answer is option A, cost and profit. A tax is a compulsory payment made to the government. If the tax rate rises, a business may have to pay more tax on its income, sales, production, or other taxable activity, depending on the tax. This can increase the business’s cost or reduce the profit left after expenses. Therefore option A is correct. Option B, customer height, is a personal physical feature and is not normally changed by a tax-rate decision. Option C, rainfall amount, depends mainly on natural and atmospheric conditions, not directly on business taxation. Option D, machine sound, is related to the machine’s design, maintenance, or operation and is not the relevant business effect here. A tax decision can influence pricing, investment, demand, and profit, but the most direct option given is cost and profit. Memory cue: higher tax usually means a higher payment to government and possibly lower remaining profit.

Related tags

Business-EnvironmentPolitical-EnvironmentClass-12Easy

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