Refer to the above table. How could the U.S. government justify its decision to offer a subsidy to a profitable and successful business?
What will be an ideal response?
It could point out that this $10 million pump-priming expenditure results in a profit of $110 million. If Boeing paid a marginal income tax of 20%, this would net the government $55 million, which is more than 5 times the original subsidy, so that the decision may be justified not only in terms of benefit/cost considerations, but even in terms of pure budgetary terms.
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Which of the following statements is not correct?
a. A gasoline tax can be an example of a tax that uses the benefits principle. b. A progressive tax attempts to achieve vertical equity. c. A progressive tax can be an example of the ability-to-pay principle. d. A regressive tax attempts to achieve vertical equity.
The slopes of the production possibilities curves for two nations reflect the
A. relative prices of the resources in the two nations. B. average income levels in the two nations. C. opportunity costs of production in the two nations. D. amounts of imports and exports of the two nations.