Question 1

As part of an anti-obesity program,the government levies an excise tax on high-fat foods.We expect consumers to pay almost all of this tax if demand is _____ and supply is _____.

Accepted Answer

A) inelastic;inelastic 
B) inelastic;elastic 
C) elastic;elastic 
D) elastic;inelastic 
A) inelastic;inelastic 
B) inelastic;elastic 
C) elastic;elastic 
D) elastic;inelastic

Question 2

The benefits principle says that:

Accepted Answer

A) the amount of tax paid depends on the measure of value. 
B) those who benefit from public spending should bear the burden of the tax that pays for that spending. 
C) those with greater ability to pay should pay more tax. 
D) those who benefit from the tax should pay the same percentage of the tax base as those who do not benefit. 
A) the amount of tax paid depends on the measure of value. 
B) those who benefit from public spending should bear the burden of the tax that pays for that spending. 
C) those with greater ability to pay should pay more tax. 
D) those who benefit from the tax should pay the same percentage of the tax base as those who do not benefit.

Question 3

Because of tax competition,state and local taxes tend to be _____;however,federal taxes tend to be _____.

Accepted Answer

A) regressive;regressive 
B) progressive;regressive 
C) progressive;progressive 
D) regressive;progressive 
A) regressive;regressive 
B) progressive;regressive 
C) progressive;progressive 
D) regressive;progressive

Question 4

The ability-to-pay principle regarding taxes suggests that:

Accepted Answer

A) the efficiency of a tax is the key feature in designing it. 
B) those who can afford it should bear the greater burden of the tax. 
C) those who benefit most from the tax should bear the greater burden of the tax. 
D) higher-income individuals should pay the same amount as lower-income individuals. 
A) the efficiency of a tax is the key feature in designing it. 
B) those who can afford it should bear the greater burden of the tax. 
C) those who benefit most from the tax should bear the greater burden of the tax. 
D) higher-income individuals should pay the same amount as lower-income individuals.

Question 5

Suppose Governor Meridias initiates a payroll tax of 10% on all income up to $50,000.Any income above $50,000 is not taxed.This payroll tax will be:

Accepted Answer

A) progressive. 
B) proportional. 
C) regressive. 
D) structural. 
A) progressive. 
B) proportional. 
C) regressive. 
D) structural.

Question 6

Taxes on the purchase of specific items such as gasoline,cigarettes,or alcoholic beverages are called _____ taxes.

Accepted Answer

A) personal income 
B) excise 
C) property 
D) sales 
A) personal income 
B) excise 
C) property 
D) sales

Question 7

Taxation according to the benefits-received principle is best illustrated by the _____ tax.

Accepted Answer

A) income 
B) sales 
C) gift 
D) gasoline 
A) income 
B) sales 
C) gift 
D) gasoline

Question 8

Use the following to answer question:  
-(Figure: A Market with a Tax)Use Figure: A Market with a Tax.The tax revenue collected by the government is equal to the area:

Accepted Answer

A) (P1 - P3)Q1. 
B) (P1 - P5)Q2. 
C) (P2 - P3)Q1. 
D) (P1 - P2)Q2. 
A) (P1 - P3)Q1. 
B) (P1 - P5)Q2. 
C) (P2 - P3)Q1. 
D) (P1 - P2)Q2.

Question 9

A tax of $10 on an income of $100,$20 on an income of $200,and $30 on an income of $300 is:

Accepted Answer

A) regressive. 
B) proportional. 
C) progressive. 
D) benefits. 
A) regressive. 
B) proportional. 
C) progressive. 
D) benefits.

Question 10

A tax that takes a _____ percentage of income as income rises is _____.

Accepted Answer

A) higher;proportional 
B) lower;an ability tax 
C) higher;progressive 
D) lower;a marginal tax 
A) higher;proportional 
B) lower;an ability tax 
C) higher;progressive 
D) lower;a marginal tax

Question 11

Use the following to answer question:  
-(Figure: The Market for Productivity Apps)Use Figure: The Market for Productivity Apps.If the government imposes a tax of $1 in this market,consumers will pay _____ more per app and purchase _____ fewer apps.

Accepted Answer

A) $1;5 
B) $1;25 
C) $0.50;5 
D) $0.50;20 
A) $1;5 
B) $1;25 
C) $0.50;5 
D) $0.50;20

Question 12

Use the following to answer question:  
-(Table: The Market for Fried Twinkies)Use Table: The Market for Fried Twinkies.The government decides to tax fried Twinkies at a rate of $0.30 per Twinkie and collect that tax from the producers.According to the table,consumers will pay _____ per Twinkie and buy _____ Twinkies after the tax.

Accepted Answer

A) $1.20;8,000 
B) $1.30;7,000 
C) $1.40;6,000 
D) $1.50;5,000 
A) $1.20;8,000 
B) $1.30;7,000 
C) $1.40;6,000 
D) $1.50;5,000

Question 13

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 elastic demand,as shown in panel _____,the greater share of the burden of an excise tax on it is borne by _____.

Accepted Answer

A) D;buyers 
B) D;sellers 
C) C;sellers 
D) C;buyers 
A) D;buyers 
B) D;sellers 
C) C;sellers 
D) C;buyers

Question 14

Price elasticities of demand and supply will NOT play a major role in determining:

Accepted Answer

A) the ability of policy makers to change consumption of a good via the imposition of an excise tax. 
B) the deadweight loss arising from the imposition of an excise tax. 
C) the burden of the tax on consumers and producers. 
D) administrative costs of imposing an excise tax. 
A) the ability of policy makers to change consumption of a good via the imposition of an excise tax. 
B) the deadweight loss arising from the imposition of an excise tax. 
C) the burden of the tax on consumers and producers. 
D) administrative costs of imposing an excise tax.

Question 15

The amount of tax levied per unit of good or service is called the tax:

Accepted Answer

A) incidence. 
B) rate. 
C) revenue. 
D) surplus. 
A) incidence. 
B) rate. 
C) revenue. 
D) surplus.

Question 16

_____ and _____ taxes are the LARGEST sources of state and local government revenue.

Accepted Answer

A) Profit;sales 
B) Property;sales 
C) FICA;income 
D) Sales;income 
A) Profit;sales 
B) Property;sales 
C) FICA;income 
D) Sales;income

Question 17

Use the following to answer question:  
-(Figure: The Market for SUVs)Use Figure: The Market for SUVs.If the government imposes a $60,000 tax on SUVs and collects it from the consumers,the _____ curve will shift _____ by _____.

Accepted Answer

A) supply;upward;$30,000 
B) supply;upward;$60,000 
C) demand;downward;$30,000 
D) demand;downward;$60,000 
A) supply;upward;$30,000 
B) supply;upward;$60,000 
C) demand;downward;$30,000 
D) demand;downward;$60,000

Question 18

An efficient way to finance the provision of city services such as street cleaning would be to charge all city residents a lump-sum tax.Such a tax would be:

Accepted Answer

A) progressive. 
B) regressive. 
C) proportional. 
D) This question can't be answered without knowing the amount of the tax. 
A) progressive. 
B) regressive. 
C) proportional. 
D) This question can't be answered without knowing the amount of the tax.

Question 19

Economic analysis shows that workers pay _____ of the FICA.

Accepted Answer

A) exactly half 
B) very little 
C) most 
D) none 
A) exactly half 
B) very little 
C) most 
D) none

Question 20

Use the following to answer question:  
-(Figure: The Market for Lattes)Use Figure: The Market for Lattes.If the government assesses a tax of $0.75 on each latte,the price the consumer pays for a latte after the tax will:

Accepted Answer

A) increase from $2 to $2.75. 
B) increase from $2 to $2.50. 
C) increase from $2 to $2.25. 
D) change,but we cannot determine by how much. 
A) increase from $2 to $2.75. 
B) increase from $2 to $2.50. 
C) increase from $2 to $2.25. 
D) change,but we cannot determine by how much.

Exam 7: Taxes

As part of an anti-obesity program,the government levies an excise tax on high-fat foods.We expect consumers to pay almost all of this tax if demand is _____ and supply is _____.

The benefits principle says that:

Because of tax competition,state and local taxes tend to be _____;however,federal taxes tend to be _____.

The ability-to-pay principle regarding taxes suggests that:

Suppose Governor Meridias initiates a payroll tax of 10% on all income up to $50,000.Any income above $50,000 is not taxed.This payroll tax will be:

Taxes on the purchase of specific items such as gasoline,cigarettes,or alcoholic beverages are called _____ taxes.

Taxation according to the benefits-received principle is best illustrated by the _____ tax.

Use the following to answer question: -(Figure: A Market with a Tax)Use Figure: A Market with a Tax.The tax revenue collected by the government is equal to the area:

A tax of $10 on an income of $100,$20 on an income of $200,and $30 on an income of $300 is:

A tax that takes a _____ percentage of income as income rises is _____.

Use the following to answer question: -(Figure: The Market for Productivity Apps)Use Figure: The Market for Productivity Apps.If the government imposes a tax of $1 in this market,consumers will pay _____ more per app and purchase _____ fewer apps.

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 elastic demand,as shown in panel _____,the greater share of the burden of an excise tax on it is borne by _____.

Price elasticities of demand and supply will NOT play a major role in determining:

The amount of tax levied per unit of good or service is called the tax:

_____ and _____ taxes are the LARGEST sources of state and local government revenue.

Use the following to answer question: -(Figure: The Market for SUVs)Use Figure: The Market for SUVs.If the government imposes a $60,000 tax on SUVs and collects it from the consumers,the _____ curve will shift _____ by _____.

An efficient way to finance the provision of city services such as street cleaning would be to charge all city residents a lump-sum tax.Such a tax would be:

Economic analysis shows that workers pay _____ of the FICA.

Use the following to answer question: -(Figure: The Market for Lattes)Use Figure: The Market for Lattes.If the government assesses a tax of $0.75 on each latte,the price the consumer pays for a latte after the tax will:

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

As part of an anti-obesity program,the government levies an excise tax on high-fat foods.We expect consumers to pay almost all of this tax if demand is _ and supply is _.

Because of tax competition,state and local taxes tend to be _;however,federal taxes tend to be _.

A tax that takes a _ percentage of income as income rises is _.

Use the following to answer question: -(Figure: The Market for Productivity Apps)Use Figure: The Market for Productivity Apps.If the government imposes a tax of $1 in this market,consumers will pay _ more per app and purchase _ fewer apps.

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 elastic demand,as shown in panel _,the greater share of the burden of an excise tax on it is borne by _.

_ and _ taxes are the LARGEST sources of state and local government revenue.

Use the following to answer question: -(Figure: The Market for SUVs)Use Figure: The Market for SUVs.If the government imposes a $60,000 tax on SUVs and collects it from the consumers,the ___ curve will shift _ by ___.