Which Statement Is TRUE

question 277

Multiple Choice

Which statement is TRUE?

• A) Tax revenues are maximized when the tax rate is 100%.
• B) Not knowing the economy's position on the Laffer curve means the effects of lowering tax rates are uncertain.
• C) Low marginal tax rates have disincentive effects on work effort.
• D) High marginal tax rates increase incentives to work.

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Definitions:

Economic Profits

The disparity between a company's overall income and its combined direct and indirect expenses.

Close Substitutes

Products or services that can serve almost the same purpose, making them almost interchangeable in the eyes of consumers.

Monopolistically Competitive Industry

A market structure where many firms sell products that are similar but not identical, allowing for competition based on factors other than just price.

Monopolistic Competitor

A firm in a market structure where many companies sell products or services that are similar but not identical, allowing for significant differentiation and competition.