Which of the following would likely have the smallest deadweight loss relative to the tax revenue?
a. a head tax (that is, a tax everyone must pay regardless of what one does or buys)
b. an income tax
c. a tax on compact discs
d. a tax on caviar
a
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Suppose the demand for gourmet coffee can be represented by a linear demand curve. At the prevailing market price the income elasticity of demand for gourmet coffee is 2. When income rises the demand curve for gourmet coffee:
A) becomes less elastic at every price. B) becomes less elastic at the price that prevailed before the change in income C) becomes more elastic at every price D) becomes more elastic at the price that prevailed before the change in income
People in developing countries may want to participate in a rotating savings and credit association (ROSCAS) because:
a. such associations are part of the black market and they offer attractive returns. b. such associations promise a guaranteed return unlike other banking institutions. c. such associations allow participating individuals to invest their savings abroad. d. such associations allow all but the last member to receive funds faster than they could save on their own. e. most governments encourage it.