The ________ States That All Else Equal, Taxes That Are

question 77

Multiple Choice

The ________ states that all else equal, taxes that are neutral with respect to economic decisions are generally preferable to taxes that distort economic decisions.

• A) principle of neutrality
• B) principle of second best
• C) principle of excess burden
• D) law of tax incidence

---

Definitions:

Variable Overhead

Expenses that vary depending on the amount of production or business operations, like utilities or raw materials.

Direct Materials

Ingredients that are specifically identifiable in the creation of a certain product.

Direct Labor-Hours

The broad sum of hours dedicated by workers directly in the manufacturing workflow.

Variable Overhead

Indirect production costs that vary with the level of output, such as utilities for a manufacturing plant.