The benefits principle is used to justify
a. sales taxes.
b. gasoline taxes.
c. "sin" taxes on cigarettes and alcoholic beverages.
d. personal income taxes.
b
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In a competitive industry buffeted by demand supply shocks, prices increase and decrease, but economic profits tend to revert to zero. Hence, profits are exhibiting
a. Above-average return b. Positive earnings c. Mean reversion d. None of the above
If the United Auto Workers successfully negotiates a wage that is higher than the competitive wage,
a. there is no excess supply of labor because everyone who wants to work at the union wage can get a job b. there is no excess demand for labor because everyone who wants to work at the union wage can get a job c. the union must ration the available jobs d. all workers are better off e. more workers are employed than at the competitive wage
Coordination problems in large firms might lead to:
A. horizontal marginal cost curves. B. downward-sloping marginal cost curves. C. upward-sloping short-run average cost curves. D. upward-sloping long-run average cost curves.
Explain why the following graph is likely to represent the long-run equilibrium for a representative firm in monopolistic competition. What will be the product price, output, and amount of economic profit?
What will be an ideal response?