Scenario 20-1 ​

question 138

Multiple Choice

Scenario 20-1
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The government is proposing switching from a progressive tax system in which families pay 15% of the first $50,000 earned, 25% of the next $50,000 earned, and 35% of any income over $100,000 to a tax system in which every family pays 20% of their income minus $20,000.
-Refer to Scenario 20-1. Which group would be most in favor of the switch from the current progressive tax policy to the new policy?

• A)Utilitarians, because they want to maximize the utility to the worst-off person in society
• B)Liberals, because of the maximin criterion
• C)Libertarians, because they believe in diminishing marginal utility
• D)All three groups would be equally in favor of the switch.

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Definitions:

OPEC

The Organization of the Petroleum Exporting Countries, a group consisting of 13 of the world's major oil-exporting nations.

Perfectly Competitive Market

A market in which all participants are price-takers.

Tacit Collusion

An unspoken, illegal agreement among competitors to avoid competing directly, often leading to higher prices.

Explicit Collusion

An overt agreement among firms within an industry to fix prices, limit production, or engage in other anticompetitive practices.