Compared to the Current Social Assistance System,a Negative Income Tax

question 61

Multiple Choice

Compared to the current social assistance system,a negative income tax would

• A) have a smaller negative effect on the incentive to work.
• B) be much more costly to administer.
• C) destroy the incentive to work.
• D) result in increasing the number of poor.
• E) increase the tendency for families to break up.

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Definitions:

Utility Possibilities Frontier

A graphical representation that shows the maximum amount of two goods that an economy can produce using all its resources efficiently, given the technology.

Contract Curve

In an Edgeworth box diagram, it represents the set of optimal distribution points for two traders based on their preferences.

Efficient Input Use

Utilization of inputs in a manner that maximizes the output or minimizes the cost under given technology and constraints.

MRTS

The Marginal Rate of Technical Substitution measures the rate at which one input can be substituted for another input in the production process, while keeping output constant.