Use the Following to Answer Questions

question 5

Multiple Choice

Use the following to answer questions :
-The negative income tax schedule recorded in the table above:

• A)removes all incentive to work.
• B)gets around the disincentive drawback in redistributing.
• C)is "regressive" until we include the $10,000 and $12,000 income brackets, and balance with +$3,000 the -$3,000 of the table.
• D)reduces but does not banish disincentive effects.
• E)is properly described by none of the above.

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the percentage of fixed versus variable costs a company has.

Variable Costs

Expenses that change in proportion to the level of production or sales activity.

Composite Units

A measure used in accounting to bundle goods or services together for the purposes of inventory management, costing, or sales analysis.

Fixed Costs

Costs that remain constant regardless of a business's operational levels, like lease payments, wages, and coverage fees.