As the Tax Wedge Associated with a Given Economic Activity

question 60

Multiple Choice

As the tax wedge associated with a given economic activity gets smaller,we would expect

• A)more of that economic activity to occur.
• B)the distortions caused by taxes on that activity to be greater.
• C)people to engage in less of that particular activity.
• D)no change in the practice of that activity until the tax wedge ultimately disappears.

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Definitions:

Altruism

Behavior that is aimed at helping another, requires some self-sacrifice, and is not performed for personal gain.

Conformity

Changing or adopting a behavior or an attitude in an effort to be consistent with the social norms of a group or the expectations of other people.

Compliance

Acting in accordance with the direct requests of other people.

Obedience

Behaving in accordance with the rules and commands of those in authority.