Jurisdiction F Levies a 10% Excise Tax on the Purchase

Multiple Choice

Jurisdiction F levies a 10% excise tax on the purchase of golf carts. The annual revenue from this tax averages $800,000 (10% * $8 million average annual golf cart purchases) . Jurisdiction F is considering raising the tax rate to 12%. Which of the following statements is true?

A) The rate increase will increase revenue by $160,000.
B) Based on a dynamic forecast, the rate increase will increase revenue by $160,000.
C) Based on a static forecast, the rate increase will increase revenue by $160,000.
D) None of these choices are true.