Exam 7: Taxes

An excise tax causes inefficiency if the number of transactions in a market is reduced as a result of the tax.Because the tax discourages mutually beneficial transactions,there is a(n)_____ from a tax.

Tax incidence refers to:

Use the following to answer question: -(Figure: The Market for Hamburgers)Use Figure: The Market for Hamburgers.If the market is originally in equilibrium and the government imposes an excise tax of $0.80 per unit of the good sold,the deadweight loss associated with the tax will be:

A principle suggesting that people with more income or wealth should pay more taxes is the _____ principle.

Use the following to answer question: -(Figure: The Market for Blue Jeans)Use Figure: The Market for Blue Jeans.The government recently levied a $10 tax on the producers of blue jeans.What area or areas in the graph identify the loss of consumer surplus due to the tax?

If the demand for good X is perfectly inelastic and a tax is levied on the producers of each unit:

A principle suggesting that people with more income or wealth should pay more taxes is the _____ principle.

The price elasticity of demand for a particular cancer drug is zero and the price elasticity of supply is 0.50.If a $1 excise tax is levied on producers,how much of this tax will eventually be paid by consumers?

A tax system achieves equity when:

Use the following to answer question: -(Figure: The Gasoline Market)Use Figure: The Gasoline Market.The pretax equilibrium price is $3,and the equilibrium quantity before tax is 20,000 gallons.An excise tax has been levied on each gallon of gasoline supplied by producers,shifting the supply curve upward.The total tax revenue collected by the government is equal to:

Given any downward-sloping demand curve for a good,the more inelastic the supply curve,the _____ equilibrium output will fall and the _____ will be the deadweight loss when the government imposes an excise tax.

According to the _____ principle,those who can afford it should pay higher tax.

Consumers in a particular market will bear the greater burden of an excise tax:

If demand and supply are both very inelastic,a decrease in the rate of an excise tax will likely:

If demand is perfectly inelastic and the supply curve is upward-sloping,then the burden of an excise tax is:

If personal income up to and including $30,000 is not taxed,income of $30,001 to $60,000 is taxed at 10%,and income over $60,000 is taxed at 25%,then a family earning an income of $100,000 will pay _____ in personal taxes.

Use the following to answer question: -(Figure: A Market with a Tax)Use Figure: A Market with a Tax.The deadweight loss arising from the imposition of this tax is equal to the areas:

If the government imposes a $500 excise tax on SUVs and the demand curve for SUVs is downward-sloping,suppliers of SUVs will simply raise the price by $500 and consumers will bear the entire burden of the tax.

Use the following to answer question: -(Figure: Tax Incidence)Use Figure: Tax Incidence.Based on the figure,the deadweight loss of an excise tax is likely to be greater in panel _____ than in panel _____.

Use the following to answer question: -(Figure: Tax Incidence)Use Figure: Tax Incidence.All other things unchanged,when a good or service is characterized by a relatively inelastic supply,as shown in panel _____,a greater share of the burden of an excise tax is borne by _____.