What are the two principles of fairness that are applied to tax systems?
What will be an ideal response?
The two principles of fairness are the benefits principle and the ability-to-pay principle. The benefits principle asserts that people should pay taxes equal to the benefits they receive from the government provided services. The ability-to-pay principle asserts that people should pay taxes according to how easily they can bear the burden of the tax.
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Refer to Figure 7.1. Suppose that instead of $350, Angus earns only $250 by playing the bagpipes, but all other earnings remain the same. If there is no ordinance against loud music, property rights belong to
A) Angus. B) Dudley. C) no one. D) both Angus and Dudley.
If a firm could practice perfect price discrimination, it would
A) allow resale of its product. B) use odd pricing. C) charge every buyer a different price. D) charge a price based on the quantity of a product bought.