If Highly Paid Entertainers Prefer to Perform and Would Do

question 253

Multiple Choice

If highly paid entertainers prefer to perform and would do so even if their pay were much lower,a tax of half of the entertainers' incomes would do which of the following?

• A) decrease the amount of entertaining done by moving along a given labor supply curve
• B) decrease the entertainers' supply of performances
• C) collect no taxes at all
• D) not change the quantity supplied of performances
• E) increase the entertainers' supply of performances as they work more to make up the income they lose in taxes

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Definitions:

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used in capital budgeting to assess profitability of investments.

Cash Inflows

Money received by a business from its operational, financing, or investing activities.

Payback Period

The time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.