Explain why a change in income tax rates causes the consumption schedule to change slope
An income tax rate determines the portion of an increase in income that is taken in taxes. If the rate increases, then for any increase in income, disposable income increases by a smaller amount. When a portion of the increase in disposable income is consumed, the consumption spending is less than it would be if the income tax rate was lower. The smaller increase in consumption for a given increase in income means that the numerical value of the MPC is smaller, and the slope of the consumption schedule is flatter. Conversely, if the income tax rate decreases, then for any increase in income, disposable income increases by a larger amount. The larger increase in consumption for a change in income means that the numerical value of the MPC is larger and the consumption schedule is steeper.
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In the above figure, if the natural monopoly is regulated with a marginal cost pricing rule, then the deadweight loss to society is
A) zero. B) ecf. C) gde. D) efcb.
________ is the process by which representatives from a union and from management negotiate a mutually agreeable contract specifying wages, employee benefits, and working conditions
a. Binding arbitration b. A strike c. Mediation d. Collective bargaining
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A. negative. B. inconclusive. C. zero. D. positive.