Suppose the government of Marina decides to pay for public radio by taxing people on the basis of the number of hours they listen to it.In order to determine the tax,it decides to conduct a survey.However,if the survey is based on voluntary self-reporting,which of the following is likely to happen?
A) People who report many hours of listening may pay a small proportion of their income in public radio tax.
B) Individuals with higher incomes may pay lower taxes than individuals with lower incomes.
C) Many individuals may understate the number of hours they listen to public radio to government in order to reduce their tax bill.
D) Many individuals may overstate the number of hours they listen to public radio to government in order to receive a lower tax bill.
E) In order to evade taxes, individuals may shift from the formal, reported economy to an underground, "off the books" economy.
Correct Answer:
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