The Accompanying Table Is the Before-Tax Consumption Schedule for a

question 50

Multiple Choice

$$\begin{array} { | c | c | } \hline \text { Gross Domestic Product (GDP) } & \text { Consumption (C) } \\\hline \$ 0 & \$ 40 \\\hline 100 & 120 \\\hline 200 & 200 \\\hline 300 & 280 \\\hline 400 & 360 \\\hline\end{array}$$ The accompanying table is the before-tax consumption schedule for a closed economy. If a lump-sum tax (the same tax amount at each level of GDP) of $40 is imposed in this economy, the tax system

• A) is regressive.
• B) is proportional.
• C) is progressive.
• D) may be either proportional or progressive.

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Definitions:

Price-elasticity

A measure of the responsiveness of the quantity demanded or supplied of a good to a change in its price.

Sneaker Manufacturers

Companies engaged in the design, production, and marketing of sneakers for various consumer segments.

Price Competitive

A market condition where businesses strive to offer their goods or services at lower prices than their competitors to attract customers.

Few Substitutes

A market condition where there are limited alternatives for a product, giving the product a higher degree of market power and potentially leading to higher prices.