Corporate profits are taxed twice because
A) taxes are collected on profits before profits are distributed to shareholders.
B) the government wants to minimize the amount of tax paid on capital gains.
C) it is economically efficient to reduce the amount of retained earnings.
D) capital gains are not indexed to the rate of inflation.
Ques. 2The production possibilities curve demonstrate which of the following concepts?
A) scarcity
B) choice
C) trade-offs
D) all of the above
Ques. 3Refer to the above figures. A negative externality existed but has been corrected. Price and quantity will be
A) P1 and Q1.
B) P2 and Q2.
C) P3 and Q3.
D) P4 and Q4.
Ques. 4Suppose we observe that the demand for eggs increases when people buy more potatoes. We can conclude that eggs and potatoes are
A) inferior goods.
B) normal goods.
C) complements.
D) substitutes.
Ques. 5If both the demand curve and the supply curve shift to the right, we can unambiguously conclude that the
A) market clearing price will increase.
B) market clearing price will decrease.
C) equilibrium quantity will increase.
D) equilibrium quantity will decrease.
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