In a perfectly competitive economy, the imposition of a proportional income tax will lead to:
A)an efficient product mix.
B)too little leisure while too many other goods are consumed.
C)too much leisure while too few other goods are consumed.
D)a point outside the production possibilities frontier.

Question

Quizplus · Accepted Answer

A proportional income tax reduces the incentive to work, leading to more leisure being taken and fewer goods being produced and consumed.

In a Perfectly Competitive Economy, the Imposition of a Proportional