Make an argument for user charges being both efficient and equitable. What information can user charges provide us that free provision can not?
What will be an ideal response?
User charges can be considered equitable from the benefit principle of taxation since individuals have to pay in proportion to the benefits they receive from the good. From an efficiency perspective, user charges can be considered efficient because they act as a price for public sector output so they minimize the excess burden of taxation. Contrary to free public provision, user charges help give an idea of consumer demand for a good so that policymakers can provide the amount of the good in line with that revealed demand.
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The amount of a tax paid by the sellers will be smaller the more ________ the demand and the more ________ the supply
A) elastic; inelastic B) inelastic; elastic C) inelastic; inelastic D) elastic; elastic
When a competitive firm produces output up to the point at which the price is equal to marginal cost, it also hires labor up to the point at which the wage is equal to the
a. marginal cost of labor. b. marginal profit of labor. c. marginal product of labor. d. value of the marginal product of labor.
At the competitive firm's profit-maximizing quantity of labor:
A. marginal profits are always positive. B. the value of the last worker's marginal product is greater than or equal to marginal cost of that input. C. the average product of labor is equal to the wage rate. D. the value of the last worker's marginal product is less than the marginal cost of that input.
Which statement is true?
A. Russia has embraced capitalism at a much faster rate than China. B. The Russian government today is moving much closer to central planning than when the country was part of the Soviet Union. C. The standard of living in Russia is higher than that of the United States. D. None of the statements are true.