A Tax Is Efficient If

question 253

Multiple Choice

A tax is efficient if

• A)individuals with the lowest incomes pay proportionately lower taxes than individuals with the highest incomes.
• B)it is based on profits earned and not on wages.
• C)it encourages saving and investment.
• D)it imposes a small excess burden relative to the revenue it raises.

---

Definitions:

Quantity Demanded

The overall volume of a commodity or service that consumers are ready and able to buy at a certain price within a market.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price over a specific period of time.

Equilibrium Price

The Equilibrium Price is the market price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Market Price

The current value at which an asset or service can be bought or sold in the open market.