Exam 16: Efficient and Equitable Taxation

Horizontal equity incorporates the notion that

Neutral taxation is taxing different commodities at the same tax rate.

A time endowment is

People who are risk neutral are more likely to engage in tax evasion than people who are risk loving.

Natural monopolies occur when a single or a few firms can take advantage of economies of scale and supply the entire industry output.

Income is a poor measure of relative position when attempting to determine horizontal equity.

Deciding to engage in tax evasion requires consideration of all of the following,except the

When the minimum marginal penalty for tax evasion is greater than the maximum marginal tax rate,theory suggests that tax evasion will be

Refer to Figure 16.3 below.When the MC_z line crosses the D_z line,profits for the firm are

Working fewer hours to reduce your tax burden is tax evasion.

Optimal user fees are paid only by the consumers of the good or service produced.

Vertical equity incorporates the notion that

Tax evasion is more likely to occur when people feel that their tax dollars are not being used properly.