The supporters of a proposal to increase marginal taxes on those earning over $200,000 a year say this change would generate $100 billion in new tax revenues. A supply-side economist would argue that the actual revenue raised will be
A) exactly $100 billion because there are no offsetting factors to a tax increase.
B) more than $100 billion, because lower income people will work harder when they perceive the tax system to be fairer.
C) more than $100 billion because interest rates will also be affected.
D) less than $100 billion because some people will respond by working less.
D
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If, when a firm doubles all its inputs, its average cost of production increases, then production displays
A) economies of scale. B) diminishing returns. C) diseconomies of scale. D) declining fixed costs.
In the long run when average total cost does not depend on the quantity of output, this is called:
A. economies of scale. B. constant economies to scale. C. diseconomies of scale. D. minimum average total cost.
Suppose the market supply for good X is given by QXS = -100 + 5PX. If the equilibrium price of X is $100 per unit then producer surplus is
A. $1,600. B. $16,000. C. $400. D. none of the statements associated with this question are correct.
Receiving a voucher for an apartment in a public housing project would be an example of a good that satisfies
A. the definition of a good with a positive externality. B. the principle of rival consumption. C. the nonexclusion principle. D. the definition of a public good.