Suppose that if your income is $50,000, your tax is $5,000, but if your income is $100,000, your tax is $8,000. Such a tax is
A. Regressive.
B. An excise tax.
C. Proportional.
D. Progressive.
Answer: A
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Suppose two neighbors share a park. One neighbor, Al, leaves trash in the park. This bothers the other neighbor, Bert. According to Coase's theorem, one necessary condition to alleviate the externality is that
A) Al is fined by the government. B) Al has the right to leave trash and Bert cannot do anything about it. C) Bert has the right to a clean park and Al cannot leave trash. D) Either Al or Bert owns the park.
You own two different energy drink brands with similar elasticities: "Blue Cow" and "600 minute energy.". If you reduce the price on "Blue Cow", you can only increase your total sales if
a. Prices for "600 minute energy" are increased b. Prices for "600 minute energy" are reduced c. Prices for "600 minute energy" stay constant d. None of the above