If there is diminishing marginal utility of income, then it may increase social welfare (assuming that it is reasonable to compare utility levels among people) to increase taxes on
a. the incomes of the rich and give the funds to the poor
b. the incomes of the poor to provide funds for job training
c. cigarettes
d. the incomes of the poor and give it to the richer classes
e. consumption goods
a. the incomes of the rich and give the funds to the poor
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Answer the following statements true (T) or false (F)
1. The former Soviet Union was an example of a traditional economy. 2. The United States had a surplus balance of trade during most of the 1990s. 3. Deciding what to produce and allocating goods and services are functions of all types of economic systems. 4. Socialism combines monopoly, capitalism, private property, and a strong dictatorial central government.
The depletion of a common resource due to individually rational but collectively inefficient overconsumption is called:
A. excludability. B. the free rider problem. C. rival in consumption. D. the tragedy of the commons.
A decrease in the price of a good would
a. shift the supply curve for the good to the left. b. give producers an incentive to produce more to keep profits from falling. c. increase the quantity demanded of the good. d. increase the supply of the good.
Answer the following statements true (T) or false (F)
1. The average expected rate of return on an asset can be fully understood as the rate that compensates for risk. 2. The Security Market Line is a straight line that plots how the average expected rates of return on assets and portfolios in an economy vary with their respective levels of nondiversifiable risk as measured by beta. 3. When the Securities Market Line shifts up, the average expected rate of return on investment assets with given risk levels is increasing. 4. The decision of the Federal Reserve to reduce the short-term interest rate will shift the Security Market Line upward.