1. Assuming both types of taxes collect the same number of dollars, a wage tax is preferable to a head tax.

A. True

B. False

2. For a “normal” good, the income and substitution effects are not opposing forces. That is, for a “normal” good, the substitution and income effects of an increase in the price will both cause a reduction in the quantity purchased.

A. True

B. False

3. Suppose supplier John faces a horizontal demand for the product he supplies to the market. If John chooses to move to a different point on this demand he faces, the revenue he generates will experience both a price and output effect.

A. True

B. False