QUESTION 5 The Laffer curve says that an increase in income taxes can raise or lower tax revenue, depending on how labor supply responds to the change in the tax rate. O a. True O b. Wrong QUESTION 6 The elasticity of labor supply -i.e., the percent change of labor supplied due to a percent change in wages - tends to be: O a. Between -1 and 0. O b. Between 0 and 1. O c. Between 1 and 5. QUESTION 7 Consider the following statements: (1) While life expectancy in the US is positively correlated with household income, this relationship has become weaker in the last decade. (2) The concept of adverse selection illustrates that asymmetric information can lead to market failure, in particular in the market for health insurance. a. Both statements are correct. O b. Both statements are incorrect. O c. Statement (1) is correct but (2) is not. O d. Statement (2) is correct but (1) is not