As the Tax Wedge Associated with a Given Economic Activity

question 60

Multiple Choice

As the tax wedge associated with a given economic activity gets smaller,we would expect

• A)more of that economic activity to occur.
• B)the distortions caused by taxes on that activity to be greater.
• C)people to engage in less of that particular activity.
• D)no change in the practice of that activity until the tax wedge ultimately disappears.