Heidi and Anastasia Are Residents of the Mythical Country of Wetland

question 10

Multiple Choice

Heidi and Anastasia are residents of the mythical country of Wetland. Heidi pays $1,500 income tax on taxable income of $6,000. Anastasia pays income tax of $21,000 on taxable income of $72,000. The income tax structure is
I.Progressive.
II.Proportional.
III.Regressive.
IV.Value-added.
V.Marginal.
​

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Only statement III is correct.
• D)Only statement V is correct.
• E)Statements II and IV are correct.

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Definitions:

Producer Surplus

The difference between the amount producers are willing to accept for a good or service versus what they actually receive.

Allocative Efficiency

A state of resource distribution where it is impossible to make any one individual better off without making someone else worse off.

Productive Efficiency

A situation in which an economy or entity is producing goods and services at the lowest possible cost, utilizing all its resources efficiently.