Edgar Browning and William Johnson, in a paper published in the Journal of Political Economy (1984), presented evidence that a one-dollar transfer to the bottom 40 percent of income distribution costs the top 60 percent nine dollars. If correct, this finding proves
a. the tax system is generating significant excess burdens.
b. these transfers are not worth the cost.
c. loopholes have to be closed.
d. the burden of the tax system is too great.
a
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Suppose that Chris had been charging $1.00 per pound for potatoes. When Chris lowered the price to $0.90 per pound, his total revenue fell. When Chris raised the price to $1.10, total revenue also fell. Which of the following could explain this?
A. The price elasticity of demand for potatoes is 1 at a price of $1.00 per pound. B. $1.00 is the equilibrium price for potatoes. C. $1.10 is more than Chris's customers' reservation prices. D. At 90 cents, there is excess demand for potatoes.
If a good has an external cost, then the marginal private cost curve
A) lies below the marginal social cost curve. B) lies above the marginal social cost curve. C) is negative. D) is the same as the marginal external cost curve.
GE Appliance Division believes which of the following warrants shifting assembly of appliances back from Shanghai to Louisville, KY:
a. The negotiation of a two-tiered wage structure for union labor, b. Faster innovations when product design engineers and assembly line team leaders are located in the same place, c. quicker delivery to retail dealers reduce inventory storage d. none of the above, e. all of the above.
A proportional tax:
A. takes the same percentage of taxes from income from all taxpayers. B. requires those with low incomes to pay a smaller percentage of their income than high-income people. C. is levied so that low-income taxpayers pay a greater proportion of their income toward taxes than high-income taxpayers. D. taxes everyone the same amount, regardless of their income.