The ability to pay principle suggests that:
a. traditional exemptions should be removed since they are more frequently used by people with ability to pay more taxes.
b. people with different levels of income should be treated in the same manner

United States Government Source of Funds and Outlays, Fiscal 2011

What will be an ideal response?

Suppose that some teachers have decided that economic and financial uncertainty have made the prospect of retiring more risky, and therefore carry a higher cost than not retiring

By using all available information as they act to achieve their goals, these teachers are exemplifying the economic idea that A) people are rational. B) people respond to economic incentives. C) optimal decisions are made at the margin. D) equity is more important than efficiency.