Most taxes distort incentives and move the allocation of resources away from the social optimum. Why do corrective taxes avoid the disadvantages of most other taxes?
a. Corrective taxes apply only to goods that are bad for people's health, such as cigarettes and alcohol.
b. Because corrective taxes correct for market externalities, they take into consideration the well-being of bystanders.
c. Corrective taxes provide incentives for the conservation of natural resources.
d. Corrective taxes do not affect deadweight loss.
b
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An inside lag is:
A. a lag in implementing policy. B. the period of time it takes for policies to work. C. a policy aimed at increasing GDP. D. a policy aimed at reducing GDP.
The marginal product of labor is the
A) change in total product produced by hiring an additional unit of labor. B) total revenue divided by units of labor. C) extra revenue gained by selling one more unit of output produced by hiring additional units of labor. D) extra revenue gained by employing one more unit of labor.
Does the law of diminishing returns apply to capital as well as labor? Explain why or why not
What will be an ideal response?
Songwriters and composers press music companies to lower the price for music downloads because
a. demand for on-line music is inelastic b. profits are maximized where price elasticity of demand is -1.0 c. songwriter royalties are a percentage of sales revenue d. profits and total revenue are maximized at different quantities e. profits are maximized at the same prices as sales revenue