Author Question: The figure above shows the U.S. production function. How would an increase in income taxes be shown ... (Read 29 times)

Sportsfan2111 · **on:** Jun 29, 2018

The figure above shows the U.S. production function. How would an increase in income taxes be shown in the figure?

A) a movement from point C to point B
B) a movement from point A to point B
C) an upward shift or rotation of the production function
D) a downward shift or rotation of the production function
E) None of the above because the effects of an increase in taxes cannot be shown in the figure.

Question 2

Martha used to pay for her expenses with her own hard-earned money. She always tried to spend as little as she could. However, she started spending more when she received a scholarship . This behavior is an example of ________.

A) moral hazard
B) a pecuniary externality
C) the free-rider problem
D) the paradox of thrift