Consider two people, Sandy Roos, who earns $25,000 . and Gary Behrman, who earns $50,000 . If the current flat-tax rate is 20 percent, then
a. Gary would prefer a poll tax to a flat tax
b. Sandy would prefer a poll tax to a flat tax
c. Gary and Sandy both pay the same amount of tax
d. Sandy would prefer the flat tax to a progressive income tax
e. Gary would prefer a progressive income tax to the flat tax
A
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Local or state offices of the Department of Justice usually set prices for natural monopolies in their jurisdictions
Indicate whether the statement is true or false
Return to the ready-to-eat cereal example from the previous question. Now assume that there is only one kind of cereal, so the manufacturer cannot distinguish between types of consumer (adults vs. children, of which suppose there are equal numbers in the market). What is the optimal menu of cereal boxes?
a. a 3 ounce box (which adults will buy) sold for 48 cents; a 4 ounce box (which children will buy) sold for $1.12. b. a 3 ounce box (which adults will buy) sold for 48 cents; a 4 ounce box (which children will buy) sold for 64 cents. c. a 2 ounce box (which adults will buy) sold for 36 cents; a 4 ounce box (which children will buy) sold for 76 cents. d. No menu; the manufacturer is better off just selling a 5 ounce box for $1.12, which is only purchased by children.