According to the law of diminishing utility,_____.
A)the same tax rate should be applied to every dollar
B)the rich people should have a lower tax rate
C)the rich people should have a higher tax rate
D)the total burden on the society from a tax will be less if proportional taxation is used
E)the poorer people should have a lower tax rate

Question

Quizplus · Accepted Answer

The law of diminishing utility states that as the quantity of a product consumed increases, the marginal utility derived from each additional unit will eventually decrease. This means that the more money someone has, the less value each additional dollar has to them. Therefore, it is argued that a higher tax rate on the wealthy would not significantly reduce their overall utility or quality of life, while generating more revenue for the government to redistribute to those who have a higher marginal utility for each dollar (i.e. the poor).

According to the Law of Diminishing Utility,_____