With a Lump-Sum Tax, the

question 101

Multiple Choice

With a lump-sum tax, the

• A)marginal tax rate is always less than the average tax rate.
• B)average tax rate is always less than the marginal tax rate.
• C)marginal tax rate falls as income rises.
• D)marginal tax rate rises as income rises.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that consumers are willing to purchase.

Perfectly Competitive Firm

A company that sells a product for which there are many sellers and buyers, and where its product is identical to that of competitors, meaning it has no control over market price.

Marginal Revenue (MR)

The extra income a company earns by selling an additional unit of a product or service.

Demand Curve

A visual depiction of how the demand for a product or service correlates with its price over a specific time frame.