An increase in marginal tax rates will
What will be an ideal response?
reduce the share of additional earnings that individuals are permitted to keep.
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________ shows that if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good
A) The mixed market system B) Comparative advantage C) The production possibilities frontier model D) Absolute advantage
To induce an agent to work hard, a principal may offer the agent a bonus, in other words, an extra payment if a performance target is hit. Suppose that the agent's performance is affected by factors beyond the agent's control, for example umbrellas are demanded more on a rainy day. Under what conditions may the bonus not induce the agent to work harder?
A) The agent is very risk averse. B) The agent is very risk loving. C) The agent is risk neutral. D) The principal is risk neutral.