A Consumer Will Buy a New Product Rather Than an Existing

question 142

Multiple Choice

A consumer will buy a new product rather than an existing product

• A)when the MU/P of the new product is less than the MU/P of the existing product.
• B)when the substitution of the new product for the old product increases the consumer's total utility.
• C)only if the new product has a lower price than the existing product.
• D)only if the MU of the new product exceeds the MU of the existing product.

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Definitions:

Ability-To-Pay

A principle of taxation that suggests taxes should be levied based on the taxpayer's ability to bear the financial burden.

Regressive Tax

A tax that takes a smaller share of the income of high-income taxpayers than of low-income taxpayers.

Progressive Tax

A tax that takes a larger share of the income of high-income taxpayers than of low-income taxpayers.

Benefits Principle

The principle of tax fairness by which those who benefit from public spending should bear the burden of the tax that pays for that spending.