What is the largest problem associated with using a tax to correct for an externality? Explain
What will be an ideal response?
The biggest problem with using a tax to correct for an externality is that damages must be estimated in financial terms. This is quite difficult to do. If the tax is incorrect, the outcome will not be efficient. In fact, the tax could lead to an even greater amount of inefficiency.
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What is the major advantage of the corporate form of business organization?
A) Its owners have limited liability. B) Its owners have unlimited liability. C) Its profits are not taxed. D) Its profits are taxed twice.
Why doesn’t a competitive firm reduce its price below the industry price to increase sales?
What will be an ideal response?
The answer to, "What goods are to be produced?" deals with:
A) who gets the goods. B) how tastes and preferences are determined. C) how resources are combined to produce goods and services. D) the kinds and quantities of goods and services produced.
The measure of what households receive after personal income tax is deducted is
A. National income. B. Personal income. C. Disposable income. D. Gross domestic product.