Taxes levied on broad bases tend to distort choice ________ and impose ________ excess burden than taxes on more sharply defined bases.
A. less; larger
B. more; larger
C. more; smaller
D. less; smaller
Answer: D
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How do increasing returns to scale affect the shape of the long-run average cost curve?
What will be an ideal response?
In the long run,
a. output, once determined, cannot be changed b. price, once determined, cannot be changed c. land and capital cannot be changed d. all inputs are variable, that is, the quantities of all inputs can be changed e. labor can be changed, but all other inputs are fixed
Buyers and sellers neglect the external effects of their actions when deciding how much to demand or supply
a. True b. False Indicate whether the statement is true or false
Answer the following questions true (T) or false (F)
1. When negative externalities exist, the competitive market supply curve does not include all of the costs borne by members of society. 2. When a tax on output is imposed to internalize the external costs of pollution, the supply curve shifts down by the amount of the tax. 3. One problem with using a command-and-control approach to pollution reduction is that the monitoring costs may be too high.