While regressive taxes are considered inequitable, cigarette taxation is popular because _____
a. it is a sumptuary tax
b. it mainly hurts tobacco farmers in a few Southern states
c. in a lifetime sense it is a progressive tax
d. people are inconsistent
a
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Consider that you are a government economist asked by a state legislature to apply excise taxes to a variety of goods sold in your state. You know you want to minimize the excess burden of taxation so you apply the Ramsey Rule
This means that you tell the legislature to _____. a. set the tax rates proportional to the elasticities of demand for each good b. set the tax rates in inverse proportion to the elasticities of demand for each good c. set the tax rates proportional to the elasticities of supply for each good d. set the tax rates in inverse proportion to the elasticities of supply for each good
When there is a shortage of a product in a market the:
A. price will fall. B. price must be below the equilibrium price. C. price must be above the equilibrium price. D. producers will reduce output and sales will fall.