Question 1

A tax that rises less than in proportion to income is described as:

Accepted Answer

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

Question 2

You have to pay a fee every time you use your community swimming pool. This is an example of the _____ principle.

Accepted Answer

A)  regressive tax 
B)  ability-to-pay 
C)  progressive tax 
D)  benefits 
A)  regressive tax 
B)  ability-to-pay 
C)  progressive tax 
D)  benefits

Question 3

The U.S. income tax is _____, while the FICA tax is _____.

Accepted Answer

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

Question 4

Use the following to answer questions:
Figure: The Market for Blue Jeans  
-(Figure: The Market for Blue Jeans) Look at the figure The Market for Blue Jeans. The government recently levied a $10 tax on the producers of blue jeans. What is the tax revenue?

Accepted Answer

A)  $1,000 
B)  $500 
C)  $4,000 
D)  $5,000 
A)  $1,000 
B)  $500 
C)  $4,000 
D)  $5,000

Question 5

If the marginal tax rate and the average tax rate are equal for all levels of income, then the tax structure is proportional.

Accepted Answer

A) True 
 B)False

Question 6

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 7

If the elasticity of demand is _____ and the elasticity of supply is _____, tax revenue is likely to decrease.

Accepted Answer

A)  3.3; 2.1 
B)  3.3; 0.5 
C)  0.2; 2.1 
D)  0.2; 0.5 
A)  3.3; 2.1 
B)  3.3; 0.5 
C)  0.2; 2.1 
D)  0.2; 0.5

Question 8

In analyzing the impact of a progressive tax system, economists focus on the _____ tax rate.

Accepted Answer

A)  average 
B)  opportunity 
C)  total 
D)  marginal 
A)  average 
B)  opportunity 
C)  total 
D)  marginal

Question 9

In general, the incidence of an excise tax is shared between buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 10

Use the following to answer questions:
Figure: The Market for Yachts  
-(Figure: The Market for Yachts) Look at the figure The Market for Yachts. If the government imposes a $30,000 tax on yachts (collected from the producers), the price of yachts will rise to _____ and the government will collect _____.

Accepted Answer

A)  $100,000; $120 million 
B)  $120,000; $90 million 
C)  $140,000; $90 million 
D)  $160,000; $120 million 
A)  $100,000; $120 million 
B)  $120,000; $90 million 
C)  $140,000; $90 million 
D)  $160,000; $120 million

Question 11

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

Accepted Answer

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

Question 12

U.S. federal taxes are generally _____, while state and local taxes are generally _____.

Accepted Answer

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

Question 13

Suppose the government imposes a $10 per month tax on cell phone service. If the demand curve for cell phone service is perfectly inelastic and the supply curve is upward-sloping, the monthly price for cell phone service will increase by:

Accepted Answer

A)  $5. 
B)  less than $10. 
C)  $10. 
D)  $0. 
A)  $5. 
B)  less than $10. 
C)  $10. 
D)  $0.

Question 14

The burden of a tax system comes from its:

Accepted Answer

A)  effect on elasticity. 
B)  effect on marginal incentives. 
C)  inequity. 
D)  government revenue. 
A)  effect on elasticity. 
B)  effect on marginal incentives. 
C)  inequity. 
D)  government revenue.

Question 15

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

Accepted Answer

A)  D; C 
B)  A; B 
C)  C; B 
D)  B; A 
A)  D; C 
B)  A; B 
C)  C; B 
D)  B; A

Question 16

Periodically cars and trucks must be relicensed. The licensing fees are a form of a tax. Design a licensing tax that is regressive and one that is progressive.

Accepted Answer

A regressive tax might be a flat lump-su

Question 17

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

Accepted Answer

A)  borne entirely by consumers. 
B)  borne entirely by producers. 
C)  shared by consumers and producers, with the burden falling mainly on consumers. 
D)  shared by consumers and producers, with the burden falling mainly on producers. 
A)  borne entirely by consumers. 
B)  borne entirely by producers. 
C)  shared by consumers and producers, with the burden falling mainly on consumers. 
D)  shared by consumers and producers, with the burden falling mainly on producers.

Question 18

A lump-sum tax, such as the fee for a driver's license, does not take into consideration:

Accepted Answer

A)  efficiency. 
B)  the benefits principle. 
C)  the ability-to-pay principle. 
D)  the tax base. 
A)  efficiency. 
B)  the benefits principle. 
C)  the ability-to-pay principle. 
D)  the tax base.

Question 19

Suppose the government levies a $4 per month excise tax on cable TV. If the demand for cable TV is relatively (but not perfectly) inelastic and the supply curve is relatively (but not perfectly) elastic, then the price of cable TV will:

Accepted Answer

A)  increase by more than $4. 
B)  increase by exactly $4. 
C)  increase by less than $4. 
D)  remain constant. 
A)  increase by more than $4. 
B)  increase by exactly $4. 
C)  increase by less than $4. 
D)  remain constant.

Question 20

Use the following to answer questions:
Figure: Tax Incidence  
-(Figure: Tax Incidence) Look at the 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

A tax that rises less than in proportion to income is described as:

You have to pay a fee every time you use your community swimming pool. This is an example of the _____ principle.

The U.S. income tax is _, while the FICA tax is _.

Use the following to answer questions: Figure: The Market for Blue Jeans -(Figure: The Market for Blue Jeans) Look at the figure The Market for Blue Jeans. The government recently levied a $10 tax on the producers of blue jeans. What is the tax revenue?

If the marginal tax rate and the average tax rate are equal for all levels of income, then the tax structure is proportional.

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

If the elasticity of demand is _ and the elasticity of supply is _, tax revenue is likely to decrease.

In analyzing the impact of a progressive tax system, economists focus on the _____ tax rate.

In general, the incidence of an excise tax is shared between buyers and sellers.

Use the following to answer questions: Figure: The Market for Yachts -(Figure: The Market for Yachts) Look at the figure The Market for Yachts. If the government imposes a $30,000 tax on yachts (collected from the producers), the price of yachts will rise to _ and the government will collect _.

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

U.S. federal taxes are generally _, while state and local taxes are generally _.

Suppose the government imposes a $10 per month tax on cell phone service. If the demand curve for cell phone service is perfectly inelastic and the supply curve is upward-sloping, the monthly price for cell phone service will increase by:

The burden of a tax system comes from its:

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

Periodically cars and trucks must be relicensed. The licensing fees are a form of a tax. Design a licensing tax that is regressive and one that is progressive.

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

A lump-sum tax, such as the fee for a driver's license, does not take into consideration:

Suppose the government levies a $4 per month excise tax on cable TV. If the demand for cable TV is relatively (but not perfectly) inelastic and the supply curve is relatively (but not perfectly) elastic, then the price of cable TV will:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

International Trade

Decision Making by Individuals 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 Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 7: Taxes

A tax that rises less than in proportion to income is described as:

You have to pay a fee every time you use your community swimming pool. This is an example of the _____ principle.

The U.S. income tax is _____, while the FICA tax is _____.

Use the following to answer questions: Figure: The Market for Blue Jeans -(Figure: The Market for Blue Jeans) Look at the figure The Market for Blue Jeans. The government recently levied a $10 tax on the producers of blue jeans. What is the tax revenue?

If the marginal tax rate and the average tax rate are equal for all levels of income, then the tax structure is proportional.

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

If the elasticity of demand is _____ and the elasticity of supply is _____, tax revenue is likely to decrease.

In analyzing the impact of a progressive tax system, economists focus on the _____ tax rate.

In general, the incidence of an excise tax is shared between buyers and sellers.

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

U.S. federal taxes are generally _____, while state and local taxes are generally _____.

Suppose the government imposes a $10 per month tax on cell phone service. If the demand curve for cell phone service is perfectly inelastic and the supply curve is upward-sloping, the monthly price for cell phone service will increase by:

The burden of a tax system comes from its:

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

Periodically cars and trucks must be relicensed. The licensing fees are a form of a tax. Design a licensing tax that is regressive and one that is progressive.

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

A lump-sum tax, such as the fee for a driver's license, does not take into consideration:

Suppose the government levies a $4 per month excise tax on cable TV. If the demand for cable TV is relatively (but not perfectly) inelastic and the supply curve is relatively (but not perfectly) elastic, then the price of cable TV will:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

International Trade

Decision Making by Individuals 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 Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

The U.S. income tax is _, while the FICA tax is _.

If the elasticity of demand is _ and the elasticity of supply is _, tax revenue is likely to decrease.

U.S. federal taxes are generally _, while state and local taxes are generally _.

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