Briefly describe the tradeoff between equity and efficiency of tax systems using a few examples
Although most Americans agree that equity and efficiency are the two most important goals of a tax system, the two goals often conflict. The most efficient tax is a lump-sum tax, yet many would call it the most unfair tax. Most people would agree that a progressive tax is more fair than a lump-sum tax, yet it distorts decisions and creates deadweight losses.
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Wayne's Jacket Shop sells Wayne's jackets for $20 each. Wayne finds that his total revenues change according to the number of workers he hires, as shown in the table below.WorkersTotal Revenue1$1,00021,40032,00041,6005800What is the marginal revenue product of the fifth worker?
A. $400 B. -$800 C. $160 D. $2
Which one of the following statements about tariffs and quotas is correct?
A. Only the tariff produces revenues for the government. B. Only the quota will cause domestic production to increase. C. Only the quota will cause domestic prices paid by consumers to increase. D. Only the quota will cause the quantity of imports to decrease.
________ is an example of a public good.
A. A Starbucks grande latté B. Chemotherapy C. An American Airlines jet D. Police protection
Demand is determined by how much suppliers are willing and able to produce.
Answer the following statement true (T) or false (F)