During a contraction,
A) higher income tax revenues tend to automatically increase a budget deficit or reduce a budget surplus.
B) higher income tax revenues tend to automatically increase a budget surplus or reduce a budget deficit.
C) lower income tax revenues tend to automatically increase a budget deficit or reduce a budget surplus.
D) lower income tax revenues tend to automatically increase a budget surplus or reduce a budget deficit.
Ans: C) lower income tax revenues tend to automatically increase a budget deficit or reduce a budget surplus.
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The supply of sand is perfectly inelastic and the demand curve for sand is downward sloping. Hence, if a tax on sand is imposed,
A) sand buyers pay the entire tax. B) sand sellers pay the entire tax. C) the tax is split evenly between the buyers and sellers. D) the government pays the entire tax. E) the government collects no tax revenue because the supply is perfectly inelastic.
To maximize net revenue, a price searcher should
A) set total revenue equal to total cost. B) set marginal revenue equal to marginal cost. C) set net revenue equal to zero. D) reduce output if marginal costs are increasing.