What is true regarding taxes in a market economy?
They tend to be high because the government is more efficient.
They tend to be high so that the government can develop a budget surplus.
They tend to be low in order to encourage work.
They tend to be low because the services provided are inexpensive.
Is the answer A?
Oh, so my answer is C.
I disagree. What does your reading assignment say?
Yes, C.
No, the answer is not A. In a market economy, taxes tend to be low in order to encourage work. This is because in a market economy, individuals and businesses have more control over their own financial decisions, and lower taxes provide an incentive for people to work and invest.
To arrive at this answer, you can consider the basic principles of a market economy and the role of taxes within this system. In a market economy, goods and services are produced, distributed, and priced by individuals and businesses based on the forces of supply and demand. The government's role is typically limited to providing certain public goods and services, such as national defense, infrastructure, and law enforcement.
High taxes, as mentioned in options B and D, are not generally associated with market economies. High taxes can discourage economic activity and investment, as they reduce the amount of money individuals and businesses have available to spend and save.
Therefore, the correct answer is C: taxes in a market economy tend to be low in order to encourage work.