Even if a tax imposed in a market generates a loss in surplus for the participants in that market, the tax could still increase economic efficiency if:
A. the government needs to generate tax revenue.
B. the public expenditures financed by the tax lead to a big enough increase in economic surplus.
C. the tax revenue is used to fund spending by local governments.
D. voters approve of the tax.
Answer: B
Economics
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If a firm in the long run produces less than its efficient scale, it
A) should raise its markup to increase its profit. B) should lower its markup to increase its profit. C) cannot be a perfectly competitive firm. D) should not advertise to increase its profit. E) must have its markup equal to zero.
Economics
Traffic congestion is an example of a ________
A) positive externality B) negative externality C) pecuniary externality D) free-rider problem
Economics