Refer to the Table

question 227

Multiple Choice

$$\begin{array} { | c | c | } \hline \text { Average Tax Rate } & \text { Tax Revenue } ( \$ B ) \\\hline 20 \% & \$ 250 \\\hline 40 & 300 \\\hline 60 & 250 \\\hline 80 & 200 \\\hline\end{array}$$ Refer to the table. If the current tax rate is 60 percent, supply-side economists would advocate

• A) lowering tax rates to 20 percent, or lower if possible.
• B) lowering tax rates to 40 percent.
• C) keeping tax rates at 60 percent.
• D) raising tax rates to 80 percent.

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Definitions:

Price Ceilings

A government-imposed limit on how high a price can be charged for a product, service, or resource, aimed at protecting consumers from excessive pricing.

Demand Curve

An illustrative depiction that demonstrates the connection between a product's price and the amount consumers are willing to purchase at various price levels.

Elastic

Describes a situation in which the demand or supply for a good or service significantly changes in response to changes in price.

Consumer Surplus

The discrepancy between the total sum consumers are prepared and capable of spending on a product or service and the actual total sum they end up paying.