A comprehensive tax of 15% on all forms of income with no deductions or exclusions is an example of a
A. proportional tax.
B. rate tax.
C. progressive tax.
D. regressive tax.
Answer: A
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Refer to Scenario 6.1. Suppose the friends are forced by government to combine their businesses and share what they make. With this revision to the scenario, the dominant strategy is for Tasha to work ________ and for Gloria to work ________
A) extremely hard; extremely hard B) extremely hard; somewhat hard C) somewhat hard; extremely hard D) somewhat hard; somewhat hard
The preferences between baskets of outcomes when the state of the world is not yet known are called
a. ex ante preferences. b. ex post preferences. c. risk-averse preferences. d. diversified preferences.
Because GDP does not fully account for improvements in the quality of goods, the GDP calculation
a. tends to overstate the true value of output in the United States. b. tends to understate the true value of output in the United States. c. provides an accurate value of output in the United States. d. measures the value correctly because price changes always capture the value of quality changes.
In a sense, a cartel is self-destructive because
A) it reduces consumer surplus. B) it sets price above marginal cost. C) each cartel member has the incentive to cheat on the cartel. D) each cartel member earns economic profit.