Vertical Equity in Taxation Refers to the Idea That People

question 95

Multiple Choice

Vertical equity in taxation refers to the idea that people

• A)in unequal conditions should be treated differently.
• B)in equal conditions should pay equal taxes.
• C)should pay taxes based on the benefits they receive from the government.
• D)should pay a proportional tax rather than a progressive tax.

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Definitions:

Marginal Cost

The extra financial burden of manufacturing one more unit of a product or service.

Natural Monopolies

A situation where a single firm can supply a product or service to an entire market at a lower cost than two or more firms, making competition impractical.

Diseconomies of Scale

A situation in which a company or business grows so large that the costs per unit increase.

Long-run ATC

Long-run Average Total Cost refers to the per-unit cost of production in the long term where all inputs are considered variable.