passwella.
Menu

JAMB Economics 1978 Question 19

Question 19

Basic Concepts

Which one of the following statements is true?

  1. A.A proportional tax is one which takes from high income people a larger fraction of their income than it takes from low income people
  2. B.Taxes on commodities or services which can be shifted elsewhere are usually called direct taxes
  3. C.The sole proprietor is a legal entity
  4. D.The influence of demand on price will be smallest in the short-run
  5. E.The cost of production is the most important determining factor of supply in the long-run.
Show the answer and explanation

Answer: E (The cost of production is the most important determining factor of supply in the long-run.)

Explanation

A is progressive tax, B describes indirect taxes, a sole proprietor is not a separate legal entity, and demand matters most in the short run. In the long run, cost of production is the main thing that decides supply.