Which of the Following Statements Is Correct

question 14

Multiple Choice

Which of the following statements is correct?

• A)A decrease in the size of a tax always decreases the tax revenue raised by that tax.
• B)A decrease in the size of a tax always decreases the deadweight loss of that tax.
• C)Tax revenue decreases when there is a small decrease in the tax rate and the economy is on the downward-sloping part of the Laffer curve.
• D)An increase in the size of a tax leads to an increase in the deadweight loss of the tax only if the economy is on the upward-sloping part of the Laffer curve.

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Definitions:

Variable Resources

Inputs or factors of production that can be adjusted in the short term to meet changes in the level of output, such as labor and raw materials.

MRPs

Marginal revenue products, a measure of the additional revenue generated by employing an additional unit of a resource or factor of production.

Labor Cost

The total expenditure incurred by employers for the wages, benefits, and taxes associated with their workforce.

Total Cost Ratio

A financial metric that sums all the costs associated with the production and delivery of goods or services to the market, divided by the total quantity produced, to assess efficiency.