Consider an Income-Tax System That Requires All Individuals to Pay

question 101

Multiple Choice

Consider an income-tax system that requires all individuals to pay exactly 3% of their income.This income-tax system is

• A)proportional.
• B)progressive,because the higher the individual's income,the greater the amount of tax paid.
• C)regressive,since 3% is harder to pay for a low-income taxpayer.
• D)fair,since everyone pays the same amount.
• E)a lump-sum system,sometimes called a poll tax.

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Definitions:

Economic Profit

Sales minus explicit costs and implicit costs.

Competition

The rivalry among businesses to sell their goods and services to consumers, typically considered healthy for stimulating innovation and keeping prices competitive.

Natural Scarcity

Refers to the finite availability of resources that are limited by nature and cannot be replaced or regenerated quickly enough to meet the increasing demand.

Monopoly Profit

The excess earnings that a firm can achieve when it is the sole provider of a product or service with no close substitutes, due to its market power.