In order to raise revenue, the federal government planned a tax amnesty program that allows tax delinquents to pay all owed tax without added financial penalty. However, economists projected that the federal government would collect a far lower percentage of total tax owed by delinquents than did state governments implementing similary programs.

Which of the following, if true, would most contribute to an explanation of the economists' projections.

A. Tax amnesty programs are only successful if they are widely publicized.
B. Most people who honestly pay their state tax are equally honest in paying their federal tax.
C. Although federal tax delinquents usually must pay high financial penalties, the states require far lower financial penalties.
D. The state tax rate varies considerably from state to state, but the federal tax is levied according to laws which apply to citizens of all the states.
E. Unlike most federal tax deliquents, most state tax delinquents fail to pay state tax because of an oversight rather than a decision not to pay.

Why is the answer E?

For large farm to be as productive as they can be, their owners need to invest heavily in expensive machinery. This typically requires them to go into considerable debt, and interest on this debt is then a significant fixed cost. This high fixed cost makes those farmers vulnerable to operating losses if the prices of their products drop.

The information above best supports which of the following inferences about large farms?
A. They can be highly productive without being profitable.
B. They tend to be so highly productive that they drive down market prices.
C. They tend to be consistently profitable if their owners borrow at low interest rates.
D. They respond to operating losses by increasing their productivity.
E. They cannot be profitable if their owners depend on credit.

Why is the answer A??