50 40 30 20 10 0 20 40 60 80 Tax Rate (%) 100 According to this Laffer curve, should the government increase the tax rate from 4C O a.) Yes, because the tax revenue continues to increase after a tax rate of 4C b.) No, because the government should increase the tax rate to 100%. Oc.) No, because the tax revenue is no longer maximized. O d.) Yes, because the government will receive a higher tax revenue.

50 40 30 20 10 0 20 40 60 80 Tax Rate (%) 100 According to this Laffer curve, should the government increase the tax rate from 4C O a.) Yes, because the tax revenue continues to increase after a tax rate of 4C b.) No, because the government should increase the tax rate to 100%. Oc.) No, because the tax revenue is no longer maximized. O d.) Yes, because the government will receive a higher tax revenue.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. Refer to the figure. Tax Revenue M Tax Size 0 a. What is curve from the figure called? b. If the economy is at point M on the curve, then a small increase in the tax rate will increase or decrease tax revenue? Increase or decrease deadweight loss? C. If the economy is at point N on the curve, then a decrease in the tax rate will increase or decrease tax revenue? Increase or decrease deadweight loss?
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QUESTION 16 16. Is the total expenditure of revenue on a government program (revenue collected by a tax) the full measure of the program's cost to society? O a) Yes. O b) No, because the benefit to society always exceeds the dollar cost of government programs. O c) No, because this does not include the efficiency cost of collecting the tax revenue. O d) No, because it does not include the cost of program administration and losses due to corruption.
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