According to the Laffer curve
A. an increase in tax rates will have an inconsistent effect on tax revenues.
B. a decrease in tax rates will always increases tax revenues.
C. an increase in tax rates will always increase tax revenues.
D. a decrease in tax rates will always decrease tax revenues.
Answer: A
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Use the following information to answer the next question. Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10% interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 each. Of the $75, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. The implicit costs of Harvey's firm in the first year were
A. $150,000. B. $100,000. C. $50,000. D. $60,000.
Suppose a perfectly competitive firm can increase its profits by increasing its output. Then it must be true that the firm's:
a. marginal cost exceeds its marginal revenue. b. price exceeds its average variable cost but is less than average total cost. c. marginal revenue exceeds its marginal cost. d. price exceeds its marginal revenue.