Which of the Following Statements Is Concerned with Equity Rather

question 38

Multiple Choice

Which of the following statements is concerned with equity rather than efficiency?

• A) Imposing a tax on a good reduces the incentive to buy that good.
• B) The burden of a new sales tax typically increases prices.
• C) Deadweight loss is the lost social welfare from a tax.
• D) Tax rates on middle-class households are too high and should be reduced.
• E) Taxes cause producers and consumers to lose surplus.

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Definitions:

Downward-Sloping Demand

Describes a market phenomenon where a product's demand decreases as its price increases, according to the law of demand.

Price

The expenditure involved in buying a good or service.

Demand Curve

A chart that depicts the link between a product's price and the amount of the product that buyers are prepared and capable of buying at various price points.

Monopolistically Competitive Industry

In a monopolistically competitive industry, numerous firms compete against each other with differentiated products, allowing for some degree of market power and price setting.