In New York City, you need a license to drive a taxicab. Each license is valid for three years, and then it expires. The holder of a license can expect to earn $10,000 in profit each year. If the interest rate is 5 percent (0.05) per year, what is the value of a newly issued taxicab license? (Assume that each year's profit is received at the end of the year.)

The deadweight loss from a $3 tax will be largest in a market with

a. inelastic supply and elastic demand. b. inelastic supply and inelastic demand. c. elastic supply and elastic demand. d. elastic supply and inelastic demand.

The argument that each person should pay taxes according to how well the individual can shoulder the burden is called

a. the ability-to-pay principle. b. the equity principle. c. the benefits principle. d. regressive.