When People with Lower Incomes Pay a Lower Tax Rate

question 40

Multiple Choice

When people with lower incomes pay a lower tax rate than those with higher incomes, it is called

• A) progressive taxation.
• B) regressive taxation.
• C) compensatory spending.
• D) mandated spending.
• E) unfunded taxation.

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Definitions:

Shutdown Point

The point in business operations where the revenue from the sale of goods or services is equal to the variable costs, beyond which the business would incur losses.

Break-Even Point

An output at which a firm makes a normal profit (total revenue = total cost) but not an economic profit.

Variable Costs

Costs that vary directly with the level of production.

Marginal Revenue

The increase in revenue that results from the sale of an additional unit of output.