Which of the Following Best Explains Why High Marginal Tax

question 30

Multiple Choice

Which of the following best explains why high marginal tax rates retard output?

• A) High marginal tax rates reduce the incentive to earn, invest, and use resources efficiently.
• B) High marginal tax rates will encourage foreign investment.
• C) High marginal tax rates will reduce budget deficits and lower interest rates.
• D) High marginal tax rates encourage people to substitute more-desired nondeductible goods for less-desired tax-deductible goods.

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Definitions:

Basing-Point Pricing

Basing-point pricing is a pricing system where the price of goods includes delivery from a specific location, regardless of the actual shipping point to the buyer.

Geographical Locations

Refers to specific places or positions on Earth's surface, identified by coordinates like latitude and longitude.

Freight Expenses

Freight Expenses are costs incurred by a business for transporting goods from one place to another via sea, air, or land.

FOB Factory Pricing

A pricing term indicating the price of goods includes the cost of delivery to the factory's loading dock, with the buyer assuming shipping costs and liability from that point onward.