Find the Tax Multiplier If the MPC Is 0

question 45

Multiple Choice

Find the tax multiplier if the MPC is 0.75.

• A) − 4.
• B) − 3.
• C) 0.33.
• D) 3.

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Definitions:

Competitive Market

A market structure where multiple firms offer similar or identical products or services, and no single firm can significantly influence market prices.

Cost Curves

Graphical representations of the costs associated with producing varying quantities of output, illustrating concepts like marginal and average cost.

Purely Competitive Industries

Industries in which many firms sell identical products to many buyers and no single seller can influence the market price.

Economic Losses

The difference when total costs, including both explicit and implicit costs, exceed total revenues, indicating that resources could be better employed elsewhere.