The Graph Shows That

question 98

Multiple Choice

The graph shows that:

• A) the effect of taxes is to make the distribution of income less equal.
• B) the effect of taxes is to make the distribution of income more equal.
• C) before-tax income and after-tax income are both equally distributed.
• D) taxes are highly regressive.

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Definitions:

Consumer's Budget

is the total amount of income available to an individual or household to spend on goods and services or to save, after taxes.

Elastic Demand

A situation where the quantity demanded of a product changes significantly in response to changes in the product's price.

Inelastic Demand

Refers to a situation where the quantity demanded of a good or service does not significantly change when its price changes.

Price Elasticity of Demand

A metric that describes the sensitivity of the demand for a product to variations in its price.