A candidate in the 1992 presidential election argued that our current federal income-tax system should be replaced with a flat-tax. That is, every individual should pay the same percentage of income in federal taxes regardless of his or her income
Evaluate the merits of this policy. In your answer, be sure to include a discussion of both the equity and efficiency considerations of such a tax proposal.
This tax would be more efficient because the tax would be difficult to shift or to evade. This tax may not be considered equitable, because high-income and low-income people would pay the same percentage of their income in taxes.
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Rembrandt paintings are expensive and not as vital for life as milk, which is cheap
Marginal utility theory explains this paradox of value: The total utility from a Rembrandt painting is ________ than the total utility from milk, and the marginal utility from a Rembrandt painting is ________ than the marginal utility from milk. A) smaller; smaller B) smaller; larger C) larger; smaller D) larger; larger
Assume there is a reduction in the shipments of petroleum products due to political tension in the Persian Gulf. Which of the following would not be expected to happen?
A) Oil companies would "ration" their supplies of gasoline by raising price. B) There would be a shortage of the original equilibrium price. C) Quantity demanded would decrease. D) The demand curve would shift to the left.
Suppose a firm produces identical goods for two separate markets and practices third-degree price discrimination. In the first market the firm charges $30 per unit, and it charges $22 per unit in the second market
Which of the following represents the ratio of price elasticities of demand in the two markets? A) E2 = (21/29)E1 B) E2 = (29/21)E1 C) E2 = E1 D) E2 = (22/30)E1 E) none of these
If the price elasticity of demand for football tickets is estimated to be 4.5, then a 10 percent increase in football ticket prices would be expected to cause a:
A. 4.5 percent decrease in quantity demanded. B. 4.5 percent increase in quantity demanded. C. 45 percent decrease in quantity demanded. D. 45 percent increase in quantity demanded.