As the tax wedge associated with a given economic activity gets smaller, we would expect
A) more of that economic activity to occur.
B) the distortions caused by taxes on that activity to be greater.
C) people to engage in less of that particular activity.
D) no change in the practice of that activity until the tax wedge ultimately disappears.
Answer: A
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Assuming the Federal Reserve makes an open-market purchase of a government security worth $10,000 . By writing a check to pay for this security, the Federal Reserve
a. reduces the balance of its assets by $10,000. b. reduces the balance of its liabilities by $10,000. c. neither reduces the balance of its assets nor the balance of its liabilities by $10,000. d. creates a new $10,000 liability against itself. e. both c and d are correct.
If Happy Cows, a dairy firm, merges with Best Cartons, a manufacturer of dairy cartons, the merger can alter the relationship between Happy Cows and Best Cartons from a(n) ________ to a(n) ________.
A) managerial relationship; partnership B) adversarial relationship; partnership C) partnership; adversarial relationship D) partnership; managerial relationship
Wage increases are resisted by firms because they decrease profits
a. True b. False Indicate whether the statement is true or false
In comparing accounting profit with economic profit, we generally find that
A) accounting profit is less than economic profit. B) economic profit and accounting profit are the same in the short run. C) accounting profit is greater than economic profit. D) economic profit exceeds accounting profit by the amount of opportunity costs.