Which of the following statements is true?
A. Sales, excise, and flat-rate taxes violate the ability-to-pay principle of taxation fairness because each results in a smaller burden on the poor than the rich.
B. Government failure may occur if voters are rationally ignorant.
C. Special-interest group political pressure results only from programs for which benefits outweigh costs.
D. Majority-rule voting and benefit-cost analysis result in the same projects being undertaken.
Answer: B
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In most markets, the equilibrium price is achieved
A. Using an equilibrium price formula. B. Through government mandate. C. Through trial and error. D. Through detailed databases.
An inward shift of the demand curve for a product causes outward shifts in the demand curves for all the factors used to produce the product.
Answer the following statement true (T) or false (F)
When plasma television sets were first introduced prices were high and few firms were in the market. Later, economic profits attracted new firms and the price of plasma televisions fell. This example illustrates
A) that consumers receive this new technology "free of charge" in the sense that they only have to pay a price for plasma televisions equal to the lowest production cost. B) a decreasing-cost industry. C) an industry with a low minimum efficient scale. D) how fickle consumer demands are.
A direct or positive relationship between price and quantity supplied is
A) the market clearing price. B) a change in demand. C) a supply curve. D) a demand curve.