Question 1

Table 12-10
  
-Refer to Table 12-10. Which plan illustrates a progressive tax?

Accepted Answer

Plan C illustrates a progressi

Question 2

Briefly describe why some economists prefer a value-added tax (VAT) to an income tax.

Accepted Answer

Some economists believe that t

Question 3

In the United States, all families pay the same proportion of their income in taxes.

Accepted Answer

A) True 
 B)False

Question 4

Antipoverty programs funded by taxes on the wealthy are sometimes advocated on the basis of the benefits principle.

Accepted Answer

A) True 
 B)False

Question 5

What are the three categories of the costs of taxes to taxpayers?

Accepted Answer

the tax payment itse

Question 6

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What is the average tax rate when income is $50,000?

Accepted Answer

A) 20 percent 
B) 15 percent 
C) 12 percent 
D) 10 percent 
A) 20 percent 
B) 15 percent 
C) 12 percent 
D) 10 percent

Question 7

Table 12-9
 $$\begin{array} { | l | l | } 
\hline \text { Income } & \text { Amount of Tax } \
\hline \$ 50,000 & \$ 5,000 \
\hline \$ 60,000 & \$ 5,500 \
\hline \$ 70,000 & \$ 6,000 \
\hline
\end{array}$$
-Refer to Table 12-9. Would the tax system be justified due to the benefits principle?

Accepted Answer

Based only on the information

Question 8

Scenario 12-1
Max and Mark enjoy beer. Max places a $23 value on a bottle of beer, and Mark places a $18 value on it. The equilibrium price for a bottle of beer is $14.
-Refer to Scenario 12-1. Suppose the government levies a tax of $6 on each bottle of beer, and the equilibrium price of a bottle of beer increases to $20. How much tax revenue is collected?

Accepted Answer

A) $0 
B) $0.5 
C) $6 
D) $13 
A) $0 
B) $0.5 
C) $6 
D) $13

Question 9

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

Accepted Answer

A) True 
 B)False

Question 10

A payroll tax is also referred to as a social insurance tax.

Accepted Answer

A) True 
 B)False

Question 11

Many economists believe that the U.S. tax system would be made more efficient if the basis of taxation were changed so that people paid taxes, more so than they do now, based on their

Accepted Answer

A) saving rather than their income. 
B) spending rather than their income. 
C) income rather than their wealth. 
D) wealth rather than their spending. 
A) saving rather than their income. 
B) spending rather than their income. 
C) income rather than their wealth. 
D) wealth rather than their spending.

Question 12

Suppose the government taxes 10 percent of the first $20,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $40,000. Calculate the marginal tax rate and the average tax rate for a person who earns $100,000.

Accepted Answer

The marginal tax rate would be 30 percen

Question 13

The flypaper theory of tax incidence

Accepted Answer

A) suggests that the burden of a tax lands solely on the person from whom the taxes are collected. 
B) assumes that most taxes should be "stuck on" the rich. 
C) says that once a tax has been imposed, there is little chance of it changing, so in essence people are stuck with it. 
D) suggests that taxes are like flies because they are everywhere and will never go away. 
A) suggests that the burden of a tax lands solely on the person from whom the taxes are collected. 
B) assumes that most taxes should be "stuck on" the rich. 
C) says that once a tax has been imposed, there is little chance of it changing, so in essence people are stuck with it. 
D) suggests that taxes are like flies because they are everywhere and will never go away.

Question 14

A person's marginal tax rate equals

Accepted Answer

A) her tax obligation divided by her average tax rate. 
B) the increase in taxes she would pay as a percentage of the rise in her income. 
C) her tax obligation divided by her income. 
D) the increase in taxes if her average tax rate were to rise by 1percent. 
A) her tax obligation divided by her average tax rate. 
B) the increase in taxes she would pay as a percentage of the rise in her income. 
C) her tax obligation divided by her income. 
D) the increase in taxes if her average tax rate were to rise by 1percent.

Question 15

Medicare is the

Accepted Answer

A) government's health plan for the poor. 
B) government's health plan for the elderly. 
C) another name for Social Security. 
D) government health plan for unpriveleged children under 18 years old. 
A) government's health plan for the poor. 
B) government's health plan for the elderly. 
C) another name for Social Security. 
D) government health plan for unpriveleged children under 18 years old.

Question 16

​A city finances a performing arts center by adding a $2.75 tax to each ticket sold.This is an example of taxation via the benefits principle.

Accepted Answer

A) True 
 B)False

Question 17

Deadweight losses and administrative burdens are key factors considered when determining the efficiency of the tax system.

Accepted Answer

A) True 
 B)False

Question 18

Scenario 12-1
Max and Mark enjoy beer. Max places a $23 value on a bottle of beer, and Mark places a $18 value on it. The equilibrium price for a bottle of beer is $14.
-Refer to Scenario 12-1. Suppose the government levies a tax of $6 on each bottle of beer, and the equilibrium price of a bottle of beer increases to $20. Because total consumer surplus has

Accepted Answer

A) fallen by more than the tax revenue, the tax has a deadweight loss. 
B) fallen by less than the tax revenue, the tax has no deadweight loss. 
C) fallen by exactly the amount of the tax revenue, the tax has no deadweight loss. 
D) increased by less than the tax revenue, the tax has a deadweight loss. 
A) fallen by more than the tax revenue, the tax has a deadweight loss. 
B) fallen by less than the tax revenue, the tax has no deadweight loss. 
C) fallen by exactly the amount of the tax revenue, the tax has no deadweight loss. 
D) increased by less than the tax revenue, the tax has a deadweight loss.

Question 19

Suppose Ron is willing to pay $200 to see a professional basketball game and Felix is willing to pay $150. Assume the normal price of a ticket is $125. The local government decides to impose a $35/ticket surcharge to raise revenue, causing the ticket price to rise to $160.The resulting deadweight loss is

Accepted Answer

A) $75. 
B) $25. 
C) $35. 
D) $150. 
A) $75. 
B) $25. 
C) $35. 
D) $150.

Question 20

Define the marginal tax rate.

Accepted Answer

The marginal tax rat

Exam 12: The Design of the Tax System

Table 12-10 -Refer to Table 12-10. Which plan illustrates a progressive tax?

Briefly describe why some economists prefer a value-added tax (VAT) to an income tax.

In the United States, all families pay the same proportion of their income in taxes.

Antipoverty programs funded by taxes on the wealthy are sometimes advocated on the basis of the benefits principle.

What are the three categories of the costs of taxes to taxpayers?

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What is the average tax rate when income is $50,000?

Table 12-9 Income Amount of Tax \ 50,000 \ 5,000 \ 60,000 \ 5,500 \ 70,000 \ 6,000 -Refer to Table 12-9. Would the tax system be justified due to the benefits principle?

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

A payroll tax is also referred to as a social insurance tax.

Many economists believe that the U.S. tax system would be made more efficient if the basis of taxation were changed so that people paid taxes, more so than they do now, based on their

Suppose the government taxes 10 percent of the first $20,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $40,000. Calculate the marginal tax rate and the average tax rate for a person who earns $100,000.

The flypaper theory of tax incidence

A person's marginal tax rate equals

Medicare is the

​A city finances a performing arts center by adding a $2.75 tax to each ticket sold.This is an example of taxation via the benefits principle.

Deadweight losses and administrative burdens are key factors considered when determining the efficiency of the tax system.

Define the marginal tax rate.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

A city finances a performing arts center by adding a $2.75 tax to each ticket sold.This is an example of taxation via the benefits principle.