To reach the socially optimal allocation of resources, the amount of government revenue received from a pollution tax should be
a. equal to the negative externality cost associated with producing the good
b. less than the negative externality cost of producing the good
c. greater than the negative externality cost of producing the good
d. equal to the private cost of producing the good
e. greater than the private cost of producing the good
A
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Which of the following taxes does NOT lead to a deadweight loss?
A) A proportional income tax B) A lump-sum tax C) A progressive income tax D) A proportional tax on property
If the government wished to shift aggregate demand to the right, it might:
A. increase government spending. B. increase income taxes. C. pressure the Fed to decrease the money supply. D. Any of these things might cause aggregate demand to shift to the right.
The parity price ratio in the 1990s is
a. approximately 100 percent of the 1910–1914 ratio b. less than the 1980s ratio but higher than the ratio of previous decades c. less than the ratio of previous decades d. approximately twice the ratio of the 1980s e. actually negative
A local doughnut shop reduced the price of its doughnuts from $4 per dozen to $3.50 per dozen, and as a result, the daily sales increased from 300 to 400 dozen. This indicates that the price elasticity of demand for the doughnuts was:
A. elastic. B. inelastic. C. unitary elastic. D. indeterminate; more information is needed to determine the price elasticity of demand.