Which of the Following Statements Is Correct

question 181

Multiple Choice

Which of the following statements is correct?

• A)The average tax rate gauges the sacrifice made by a taxpayer, whereas the marginal tax rate gauges the distortion of taxes on consumer decisions.
• B)The marginal tax rate gauges the sacrifice made by a taxpayer, whereas the average tax rate gauges the distortion of taxes on consumer decisions.
• C)The average tax rate measures how much the tax system discourages people from working.
• D)The marginal tax rate measures total taxes paid divided by total income.

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Definitions:

Marginal Utility

The additional satisfaction or advantage a consumer experiences from consuming one more unit of a product or service.

Maximizing Utility

Maximizing Utility refers to the economic goal of consumers to gain the highest level of satisfaction from their consumption choices, within their budget constraints.

Salience of Prices

The degree to which the price of a good or service stands out to consumers and influences their purchasing decisions.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually do pay.