The dead-weight loss from an excise tax
a. is greater if demand is perfectly inelastic.
b. is caused by a shift in consumer preferences when the tax is raised.
c. is the lost surplus that results from higher prices and lower output resulting from the tax.
d. is of little concern to policy makers since all excise taxes are "sin" taxes.
e. is the difference between consumer surplus and producer surplus.
C
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Rika's opportunity cost of producing 100 t-shirts is 50 jackets. Jeff's opportunity cost of producing 75 t-shirts is 25 jackets. Who should specialize in jackets?
A) Rika B) Jeff C) neither D) both E) More information is needed about their production possibilities frontiers to determine who should specialize in jackets.
Which of the following policies would not prevent the Social Security trust fund from running out of assets?
A) Reduce promised benefits B) Reduce taxes C) Increase taxes D) Earn a higher rate of return