All taxes change behavior and distort economic choices.
Answer the following statement true (T) or false (F)
True
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Investment spending tends to be closely related to the current pace of economic growth
Indicate whether the statement is true or false
Manny's Bar-n-Grill is next door to a franchised fast-food restaurant near a busy freeway exit. Essentially, the menus, food quality, atmosphere, and service are equal at the two restaurants. Nevertheless, the nationally franchised restaurant can attract more customers, even though its prices are higher. This situation
a. indicates that people are irrational because it never makes sense to pay a higher price when a product is cheaper elsewhere. b. is one in which the national franchise provides uninformed consumers with valuable information that reduces their risk of being unsatisfied with the purchase. c. reflects the greater elasticity of supply for food at Manny's Bar-n-Grill relative to the nationally franchised restaurant. d. is inconsistent with the basic postulates that underlie the economic way of thinking.
The Herfindahl-Hirschman Index measures
A. concentration in the industry. B. industrial average output. C. economies of scale. D. consumer confidence.
Refer to the diagrams for two separate product markets. Assume that society's optimal level of output in each market is Q0 and that government purposely shifts the market supply curve from S to S1 in diagram (a) on the left and from S to S2 in diagram (b) on the right. We can conclude that the government is correcting for
A. positive externalities in both diagrams. B. negative externalities in diagram (a) and positive externalities in diagram (b). C. negative externalities in both diagrams. D. positive externalities in diagram (a) and negative externalities in diagram (b).