Gasoline taxes that are typically used for highway construction and maintenance are consistent with which of the following principles of taxation?
A) the ability-to-pay principle B) the vertical-equity principle
C) the horizontal-equity principle D) the benefits-received principle
D
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The term "path dependence" refers to
a. inefficient outcomes that result from early technology choices that are not optimal in the long run. b. the tendency for competitive markets to become monopolistic in the long run. c. inefficient outcomes that result from negative externalities. d. the natural growth of monopoly when economies of scale exist in a market.
The trade-creation effect refers to:
a. a reduction in economic efficiency as a result of a preferential trade agreement. b. a production shift to a higher-cost producer as a result of a preferential trade agreement. c. the outcome of a preferential trade agreement that allows a country to obtain goods at a lower cost than is available at home. d. diversion of production from a country that has comparative advantage. e. a production shift to a country that does not have comparative advantage.