The Empirical Evidence Suggests That a Modest Increase in Income

question 97

Multiple Choice

The empirical evidence suggests that a modest increase in income tax rates would

• A) result in at least a 10% reduction in hours worked.
• B) not seriously reduce the incentive to work.
• C) eliminate the current income inequality in Canada.
• D) actually reduce tax revenue.
• E) cause the wealthy to move to other countries.

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Definitions:

Monopolistic Industry

An industry dominated by a single firm that has control over pricing and the market, facing little to no competition.

Blocked Entry

A condition in a market where barriers prevent new firms from entering, often leading to reduced competition and allowing existing firms to maintain higher prices and profits.

Price Elastic

Refers to the responsiveness of the quantity demanded or supplied of a good to a change in its price.

Demand

The desire for a particular good or service combined with the willingness and ability to pay for it.