A local government currently has a tax base of $4 million and a tax rate of 5 percent. If the tax rate is increased to 6 percent, the tax base will decrease to $3.5 million. If the goal is to maximize tax revenues the tax rate should be
A) lowered below 5 percent.
B) kept at 5 percent.
C) raised to 6 percent.
D) abolished.
Answer: C
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Refer to Table 4-12. The equations above describe the demand and supply for Bubba's Fried Jellybeans. The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units. What is the value of consumer surplus?
A) $5 thousand B) $12.5 thousand C) $25 thousand D) $37.5 thousand
Ad valorem taxation means
A) that only the value added by a service provider is taxed. B) that the tax rate is a percentage of the price paid for a product. C) a negative income tax. D) a progressive property tax imposed in some states.
Supply describes how much of something producers:
A. are willing and able to buy under certain circumstances. B. want to sell under certain circumstances, although they may not be able to. C. are willing and able to offer for sale at varies prices under given circumstances. D. want to offer for sale under certain circumstances, although they may not be willing to.
If the government were to increase taxes, it would be enacting:
A. expansionary budgetary policy. B. contractionary monetary policy C. expansionary fiscal policy. D. contractionary fiscal policy.