Assume That Economy a and Economy B Have the Same

question 114

Multiple Choice

Assume that Economy A and Economy B have the same resources, but that individuals in Economy A have specialized whereas individuals in Economy B have not. Given this information, you can determine that

• A) Economy A will have a higher output than Economy B.
• B) Economy A will have a lower output than Economy B.
• C) Economy A and Economy B will have identical outputs.
• D) individuals in Economy A will have lower incomes than individuals in Economy B.

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Definitions:

Federal Government

The national government of a federal country, such as the United States, which shares power with state and local governments.

Boston Tea Party

A political protest by the American colonists against Great Britain in 1773, where they destroyed an entire shipment of tea sent by the East India Company in defiance of British tea taxes.

Marginal Tax Rate

The marginal tax rate is the rate at which the last dollar of a taxpayer's income is taxed, indicating the rate of tax that applies to each additional dollar of taxable income.

Regressive Tax

A tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases.