Which of the following statements is not correct regarding taxes?
A. The largest source of state and local governments tax revenue is sales and excise taxes.
B. The largest source of federal government tax revenue is individual income taxes.
C. A sales tax on food is a regressive tax.
D. A proportional tax is equal to a fixed dollar amount.
Answer: D
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Picture a linear downward-sloping demand curve. The price elasticity of demand
a. remains the same for all price ranges on that demand curve b. varies among the price ranges on that demand curve c. varies but is always greater than one whatever the price range on that demand curve d. is always 1.0 for any price range where the price difference is $1, such as $10 and $9 e. is always zero
The government sometimes provides public goods because
a. private markets are incapable of producing public goods. b. free-riders make it difficult for private markets to supply the efficient quantity. c. markets are always better off with some government oversight. d. external benefits will accrue to private producers.