Author Question: The best way to evaluate the effect of a specific tax is _____. a. to consider the tax in ... (Read 45 times)

audragclark · **on:** Jul 1, 2018

The best way to evaluate the effect of a specific tax is _____.

a. to consider the tax in isolation
b. to consider the tax in the context of the entire tax system
c. to consider whether a tax is progressive, regressive, or proportional
d. a and c

Question 2

If there are 2 identical firms in a market that choose the quantity they produce, total welfare is the highest when there is a cartel.

Indicate whether the statement is true or false

marict · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

b

Answer to Question 2

False. A cartel acts like a virtual monopoly and thus produces the least output. Output is the greatest if the 2 firms act as a Stackelberg Oligopoly which is therefore preferred.