A Country Is Using a Proportional Tax When

question 213

Multiple Choice

A country is using a proportional tax when

• A)its marginal tax rate equals its average tax rate.
• B)its marginal tax rate is less than its average tax rate.
• C)its marginal tax rate is greater than its average tax rate.
• D)it uses a lump-sum tax.

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Definitions:

Total Profit

The total financial gain made by a business after subtracting all costs and expenses from total revenue.

Short Run

A time period in economics during which at least one input is fixed and cannot be changed by the firm, contrasting with the long run where all inputs are variable.

Average Variable Cost

The total variable cost divided by the quantity of output produced; it is the cost of producing an additional unit of a good or service.

Purely Competitive

Market structures characterized by many buyers and sellers, where no single entity has the market power to influence the price of a homogeneous product.