According to supply-side economics, changes in marginal tax rates will have which of the following effects?

Suppose all prices increase by 10 percent in the year while the total sales of HDTVs remain constant. This is

A) a violation of the law of demand since fewer HDTVs should be purchased at a higher price. B) a violation of the law of demand since more HDTVs should have been purchased with higher incomes. C) not a violation of the law of demand since the relative price of HDTVs did not change. D) not a violation of the law of demand since the law of demand does not apply to expensive goods like HDTVs.

Insurance works because it:

A. reallocates the costs of unforeseen events, sparing any individual from taking the full hit. B. makes it less likely that their clients will experience unforeseen events. C. prevents any one individual from experiencing all the unforeseen events. D. None of these statements is true.