The Tax Wedge Is the Difference Between the

question 98

Multiple Choice

The tax wedge is the difference between the

• A)amount of taxes needed to balance the federal budget and the actual amount of taxes.
• B)amount of taxes needed to pay off the national debt and the actual amount of taxes.
• C)pretax and posttax returns to an economic activity.
• D)nominal and real interest rates.

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Definitions:

Total Cost Curve

A graphical representation showing the total cost incurred by a firm at different levels of output.

Variable Input

An input in the production process that can be adjusted in the short term to change the level of output.

Marginal Product

The additional output that is produced by adding one more unit of a specific input, while holding all other inputs constant.

Marginal Cost Curve

A graphical representation showing how the cost of producing one more unit of a good varies as the production volume changes.