Using the principle of vertical equity, it is easy to argue in favor of _____
a. sumptuary taxation
b. progressive taxation
c. regressive taxation
d. none of the above
d
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Some competitive firms are willing to operate at a loss in the short run because their revenues are at least able to cover their variable costs
a. True b. False Indicate whether the statement is true or false
Situation 4-1 During the winter of 1973-74, a general system of wage and price controls (including a price ceiling on gasoline) was in force in the United States. At the beginning of 1974, some oil-producing countries imposed an oil embargo (a legal prohibition on commerce) on the West. In the spring of 1974, price controls were abolished. Refer to Situation 4-1. If no price controls had been in
place, the effect of the oil embargo on the equilibrium price and quantity of gasoline would have been A) an increase in both price and quantity. B) an increase in price and a decrease in quantity. C) a decrease in price and an increase in quantity. D) a decrease in both price and quantity.
When medical fee schedules are negotiated by two monopolists—one representing patients and one representing providers—the equilibrium medical fees will:
a. be less than fees determined by patient groups alone. b. be greater than fees determined by provider groups alone. c. depend on the relative bargaining strengths of the two groups negotiating the fee schedule. d. be less than fees determined in a competitive market. e. be greater than fees determined in a competitive market.
Refer to Table 2.3, which shows the production possibilities frontier between the production of capital goods and consumer goods in an economy. What is the opportunity cost of producing 3 units of capital goods at point D?
Table 2.3 Products A Capital goods 0 Consumer 40 goods B C D E 1 2 3 4 35 20 7 0 a. 35 units of capital goods. b. 13 units of consumer goods. c. 7 units of consumer goods. d. 15 units of consumer goods. e. 5 units of consumer goods.