If There Are Only Two Goods, If More of Good

question 31

Multiple Choice

If there are only two goods, if more of good 1 is always preferred to less, and if less of good 2 is always preferred to more, then indifference curves

• A)slope downward.
• B)slope upward.
• C)may cross.
• D)could take the form of ellipses.
• E)None of the above.

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Definitions:

Regressive Tax

A tax that takes a larger percentage of income from low-income earners than from high-income earners, essentially burdening the poor more than the rich.

Proportional Tax

A proportional tax is a tax system where the tax rate remains constant regardless of the amount subject to taxation, meaning individuals pay the same percentage of their income regardless of income level.

Regressive Tax

A tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases, disproportionately affecting those with lower income.

Average Tax Rate

The ratio of total taxes paid to the total taxable income, reflecting the percentage of income that goes to taxes.