Because workers tend to work more when their after-tax wage increases, the government can increase tax revenue by cutting taxes.
?
Answer the following statement true (T) or false (F)
False
Rationale: The combination of substitution and wealth effects leading workers to work more when their after-tax wage increases is NOT sufficient for the government to increase tax revenue by cutting taxes. This is because substitution effects in the labor market suggest that workers will work less as wage taxes increase, so they will pay less in additional tax revenues, and tax revenue will decrease, not increase.
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An organization of producers that limits the amount of a good produced is known as a
A) free market organization. B) guild. C) collective. D) co-op.
In making decisions about what to consume, a person's goal is to
A) allocate her limited income among all the products she wishes to buy so that she receives the highest total utility. B) buy low-priced goods rather than high-priced goods. C) maximize her marginal utility from the goods and services she wishes to buy using her limited income. D) consume as many necessities as possible and then, if there is money left over, to buy luxuries.