Tax Policy Typically Has the Goals of Efficiency and Equity

question 53

Multiple Choice

Tax policy typically has the goals of efficiency and equity.These goals are frequently:

• A)met only by a lump-sum tax
• B)consistent with the goals of vertical equity
• C)unable to be both fulfilled simultaneously
• D)achieved when company tax rates are very high

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Definitions:

Elastic Demand

A situation where the quantity demanded of a good or service significantly changes as a result of a change in price.

Elastic Supply

Refers to a situation where the quantity of a good supplied by producers changes significantly in response to a small change in its price.

Inelastic Demand

A market situation where the demand for a product does not significantly change in response to price changes.

Inelastic Supply

A scenario in which the amount of a product or service provided is not significantly affected by variations in its price.