The marginal tax rate can be calculated by which of the following formulas?
A. total taxes due divided by total taxable income
B. total taxable income divided by total taxes due
C. the change in taxable income divided by the change in taxes due
D. the change in taxes due divided by the change in taxable income
Answer: D
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The substitution effect of a wage increase: a. results in an increase in the quantity of labor supplied. b. results in a decrease in the quantity of labor supplied. c. has no impact on the quantity of labor supplied
d. results in an increase in the quantity of leisure enjoyed.
In which of the following games is it clearly the case that the cooperative outcome of the game is good for the two players and bad for society?
a. Two oil companies own adjacent oil fields over a common pool of oil, and each company decides whether to drill one well or two wells. b. Two airlines dominate air travel between City A and City B, and each airline decides whether to charge a "high" airfare or a "low" airfare on flights between those two cities. c. Two superpowers decide whether to build new weapons or to disarm. d. In all of the above cases, the cooperative outcome of the game is good for the two players and bad for society