Indicate Which of the Following Statements Concerning the Following Tax

question 149

Multiple Choice

Indicate which of the following statements concerning the following tax rate structures is/are correct.
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$$\begin{array} { c c c } & \text { When Income } & \text { Total Tax } \\&\text { Equals } &\text { Equals } \\\text { Structure \#1 } & 10,000 & 600 \\& 100,000 & 5,000 \\\text { Structure \#2 } & 15,000 & 900\\& 75,000 & 4,500 \\\\\text { Structure \#3 } & 13,000 &975 \\& 86,000 & 6,600 \\\end{array}$$
I.Tax Structure #1 is proportional.
II.Tax Structure #1 is regressive
III.Tax Structure #2 is progressive.
IV.Tax Structure #3 is progressive
?

• A)Only statement I is correct.
• B)Only statement III is correct.
• C)Statements I and II are correct.
• D)Statements II and IV are correct.
• E)Statements I, II, and IV are correct.

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Definitions:

Economic Profit

The total revenue of a business minus both explicit and implicit costs.

Long-run Equilibrium

A state in which all firms in a market are making normal profits, with no incentive for entry or exit, indicating a stable market condition.

Competitive Price-searcher Market

A market condition where firms have some power to set prices due to product differentiation, yet must actively seek out the best prices and competition exists.

Zero Economic Profits

A situation in which a firm's total revenues exactly equal its total costs, implying no excess return over the opportunity cost of resources.