If the marginal income tax rate falls from 50 percent to 40 percent:
A. after-tax wages decline.
B. the incentive to work becomes weaker.
C. the average tax rate rises.
D. the incentive to work becomes stronger.
Answer: D
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Many nations are consistently accused of enjoying the benefits of membership in the United Nations, yet they provide few or no funds to support the organization. This is an example of
A) the principle of rival consumption. B) the free-rider problem. C) the negative externality problem. D) the property rights problem.
Answer the following questions true (T) or false (F)
1. Network externalities refer to the situation where the usefulness of a product increases with the number of consumers who use it. 2. A public franchise gives the exclusive right to produce a product for 20 years from the date the product is invented. 3. A virtuous cycle refers to the development of new products that follows when a monopoly earns economic profits.