Indicate whether each of the following statements is true, false, or uncertain, and explain why:
a. A proportional tax on all commodities including leisure is equivalent to a lump sum tax.
b. Efficiency is maximized when all commodities are taxed at the same rate.
c. Average cost pricing for a natural monopoly allows the enterprise to break even, but the outcome is inefficient.
d. Tom’s workplace provides free access to a fitness room; Jerry’s does not. Horizontal equity requires that Tom be taxed on the value of having access to the fitness room.

  • CreatedMarch 25, 2015
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