The Principle of Vertical Equity Is Satisfied When _____

question 27

Multiple Choice

The principle of vertical equity is satisfied when _____.

• A)individuals with a greater ability to pay have higher taxes than individuals with a lower ability to pay
• B)individuals receiving higher benefits from a government program pay higher taxes than those receiving lower benefits
• C)taxes increase as family size increases
• D)taxes on higher income individuals are more efficient than the taxes on lower income individuals

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Definitions:

Productive Efficiency

A state where an economy or firm produces goods or services at the lowest possible cost, using resources in the best possible manner without waste.

Managerial Incentives

Incentives designed to motivate managers to make decisions that align with the owner's or shareholders' interests.

Pure Monopolist

A single supplier in a market that controls all the goods or services, with no close substitutes and high barriers to entry.

Socially Optimal

A condition or point at which the social welfare is maximized, considering the benefits and costs to society as a whole.