Question 1

Annual _____ taxes are paid on the value of a home.

Accepted Answer

A)  income 
B)  profits 
C)  sales 
D)  property 
A)  income 
B)  profits 
C)  sales 
D)  property

Question 2

Paying a tax of $20 on an income of $100, a tax of $15 on an income of $200, and a tax of $12 on an income of $300 is an example of a:

Accepted Answer

A)  flat tax. 
B)  proportional tax. 
C)  progressive tax. 
D)  regressive tax. 
A)  flat tax. 
B)  proportional tax. 
C)  progressive tax. 
D)  regressive tax.

Question 3

Use the following to answer questions:
Figure: The Market for Hamburgers  
-(Figure: The Market for Hamburgers) Look at the 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:

Accepted Answer

A)  $40. 
B)  $240. 
C)  $105. 
D)  $90. 
A)  $40. 
B)  $240. 
C)  $105. 
D)  $90.

Question 4

Use the following to answer question:
Figure: An Excise Tax  
-(Figure: An Excise Tax) Look at the figure An Excise Tax. If an excise tax equal to $1.10 is imposed on this good, then the price paid by consumers will:

Accepted Answer

A)  rise by $1.10. 
B)  rise by $1.33. 
C)  not rise. 
D)  rise by $0.50. 
A)  rise by $1.10. 
B)  rise by $1.33. 
C)  not rise. 
D)  rise by $0.50.

Question 5

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

Accepted Answer

A)  the more price-elastic the demand is relative to supply. 
B)  the less price-elastic demand is relative to supply. 
C)  if demand has the same price elasticity as supply. 
D)  regardless of the price elasticity of demand or supply. 
A)  the more price-elastic the demand is relative to supply. 
B)  the less price-elastic demand is relative to supply. 
C)  if demand has the same price elasticity as supply. 
D)  regardless of the price elasticity of demand or supply.

Question 6

Suppose Congress passed a new tax system, such that all federal, state, and local taxes were replaced with one tax: a tax of $14,000 for every person 18 and over. This new tax system would clearly improve:

Accepted Answer

A)  tax equity. 
B)  tax fairness. 
C)  tax efficiency. 
D)  government revenue. 
A)  tax equity. 
B)  tax fairness. 
C)  tax efficiency. 
D)  government revenue.

Question 7

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

Accepted Answer

A)  consumers pay the entire tax, and deadweight loss will occur because the equilibrium quantity of good X falls. 
B)  consumers pay the entire tax, and there is no deadweight loss because the equilibrium quantity of good X remains constant. 
C)  consumers and producers share the burden of the tax, and there is no deadweight loss because the equilibrium quantity of good X remains constant. 
D)  producers pay the entire tax, and deadweight loss will occur because the equilibrium quantity of good X falls. 
A)  consumers pay the entire tax, and deadweight loss will occur because the equilibrium quantity of good X falls. 
B)  consumers pay the entire tax, and there is no deadweight loss because the equilibrium quantity of good X remains constant. 
C)  consumers and producers share the burden of the tax, and there is no deadweight loss because the equilibrium quantity of good X remains constant. 
D)  producers pay the entire tax, and deadweight loss will occur because the equilibrium quantity of good X falls.

Question 8

Use the following to answer questions:
Scenario: The Market for Good X:
The market for good X can be depicted with the following demand and supply equations:
Demand: P = 50 - 0.5Q
Supply: P = 0.33Q
where P is price per unit and Q represents quantity in units. Policy makers plan on imposing a $1 per unit tax on this good.
-(Scenario: The Market for Good X) Look at the scenario The Market for Good X. If a $1 per unit tax is imposed on this good, the new supply curve will be:

Accepted Answer

A)  P = 0.33Q + 1. 
B)  P = 50 - 0.5Q 
C)  P = 0.33Q - 1. 
D)  P = 0.33Q + 1 + 50 - 0.5Q. 
A)  P = 0.33Q + 1. 
B)  P = 50 - 0.5Q 
C)  P = 0.33Q - 1. 
D)  P = 0.33Q + 1 + 50 - 0.5Q.

Question 9

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 an AVERAGE tax rate of:

Accepted Answer

A)  5%. 
B)  10%. 
C)  13%. 
D)  25%. 
A)  5%. 
B)  10%. 
C)  13%. 
D)  25%.

Question 10

If the government imposes a $5 excise tax on leather shoes and the price of leather shoes increases by $2:

Accepted Answer

A)  the government will receive less tax revenue than anticipated. 
B)  consumers are paying more of the tax than the producers. 
C)  producers are paying more of the tax than are the consumers. 
D)  the quantity of shoes sold will increase. 
A)  the government will receive less tax revenue than anticipated. 
B)  consumers are paying more of the tax than the producers. 
C)  producers are paying more of the tax than are the consumers. 
D)  the quantity of shoes sold will increase.

Question 11

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.

Accepted Answer

A)  more; smaller 
B)  more; larger 
C)  less; smaller 
D)  less; larger 
A)  more; smaller 
B)  more; larger 
C)  less; smaller 
D)  less; larger

Question 12

A(n) _____ tax tends to encourage consumption and discourage saving and investing.

Accepted Answer

A)  consumption 
B)  sales 
C)  poll 
D)  income 
A)  consumption 
B)  sales 
C)  poll 
D)  income

Question 13

Use the following to answer questions:
Figure: The Market for Yachts  
-(Figure: The Market for Yachts) Look at the figure The Market for Yachts. A quota of _____ will bring about the same price and output in the market for yachts as would an excise tax of $30,000.

Accepted Answer

A)  2,000 
B)  3,000 
C)  4,000 
D)  The answer is impossible to determine. 
A)  2,000 
B)  3,000 
C)  4,000 
D)  The answer is impossible to determine.

Question 14

If personal income up to and including $25,000 is not taxed, income of $25,001 to $50,000 is taxed at 10%, and income over $50,000 is taxed at 25%, a family earning income equal to $60,000 will pay a marginal tax rate of _____ and an average tax rate of _____.

Accepted Answer

A)  12.5%; 25% 
B)  10%; 15% 
C)  25%; 8.3% 
D)  25%; 25% 
A)  12.5%; 25% 
B)  10%; 15% 
C)  25%; 8.3% 
D)  25%; 25%

Question 15

Deadweight losses arising from an excise tax are greatest when demand:

Accepted Answer

A)  and supply are relatively inelastic. 
B)  is relatively inelastic and supply is relatively elastic 
C)  is relatively elastic and supply is relatively inelastic. 
D)  and supply are relatively elastic. 
A)  and supply are relatively inelastic. 
B)  is relatively inelastic and supply is relatively elastic 
C)  is relatively elastic and supply is relatively inelastic. 
D)  and supply are relatively elastic.

Question 16

Use the following to answer questions:
Figure: Income Tax Payments  
-(Figure: Income Tax Payments) Look at the figure Income Tax Payments. Which panel or panels best represent the effects of a proportional income tax?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  A and B 
A)  A 
B)  B 
C)  C 
D)  A and B

Question 17

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

Accepted Answer

A)  more; smaller 
B)  more; larger 
C)  less; smaller 
D)  less; larger 
A)  more; smaller 
B)  more; larger 
C)  less; smaller 
D)  less; larger

Question 18

Which of the following taxes is the largest source of government revenue?

Accepted Answer

A)  sales 
B)  property 
C)  individual income 
D)  death 
A)  sales 
B)  property 
C)  individual income 
D)  death

Question 19

How is it that a higher tax rate can increase tax revenue in some cases but decrease it in other cases? Relate this to the price elasticity of demand.

Accepted Answer

A higher tax will increase the price of

Question 20

If the government imposes a $5 excise tax on leather shoes and the price of leather shoes does not change:

Accepted Answer

A)  the government will receive less tax revenue than anticipated. 
B)  consumers are paying all of the tax. 
C)  producers are paying all of the tax. 
D)  consumers and producers are paying equal amounts of the tax. 
A)  the government will receive less tax revenue than anticipated. 
B)  consumers are paying all of the tax. 
C)  producers are paying all of the tax. 
D)  consumers and producers are paying equal amounts of the tax.

Annual _____ taxes are paid on the value of a home.

Paying a tax of $20 on an income of $100, a tax of $15 on an income of $200, and a tax of $12 on an income of $300 is an example of a:

Use the following to answer question: Figure: An Excise Tax -(Figure: An Excise Tax) Look at the figure An Excise Tax. If an excise tax equal to $1.10 is imposed on this good, then the price paid by consumers will:

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

Suppose Congress passed a new tax system, such that all federal, state, and local taxes were replaced with one tax: a tax of $14,000 for every person 18 and over. This new tax system would clearly improve:

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

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 an AVERAGE tax rate of:

If the government imposes a $5 excise tax on leather shoes and the price of leather shoes increases by $2:

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.

A(n) _____ tax tends to encourage consumption and discourage saving and investing.

Use the following to answer questions: Figure: The Market for Yachts -(Figure: The Market for Yachts) Look at the figure The Market for Yachts. A quota of _____ will bring about the same price and output in the market for yachts as would an excise tax of $30,000.

If personal income up to and including $25,000 is not taxed, income of $25,001 to $50,000 is taxed at 10%, and income over $50,000 is taxed at 25%, a family earning income equal to $60,000 will pay a marginal tax rate of _ and an average tax rate of _.

Deadweight losses arising from an excise tax are greatest when demand:

Use the following to answer questions: Figure: Income Tax Payments -(Figure: Income Tax Payments) Look at the figure Income Tax Payments. Which panel or panels best represent the effects of a proportional income tax?

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

Which of the following taxes is the largest source of government revenue?

How is it that a higher tax rate can increase tax revenue in some cases but decrease it in other cases? Relate this to the price elasticity of demand.

If the government imposes a $5 excise tax on leather shoes and the price of leather shoes does not change:

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

Annual _____ taxes are paid on the value of a home.

Paying a tax of $20 on an income of $100, a tax of $15 on an income of $200, and a tax of $12 on an income of $300 is an example of a:

Use the following to answer question: Figure: An Excise Tax -(Figure: An Excise Tax) Look at the figure An Excise Tax. If an excise tax equal to $1.10 is imposed on this good, then the price paid by consumers will:

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

Suppose Congress passed a new tax system, such that all federal, state, and local taxes were replaced with one tax: a tax of $14,000 for every person 18 and over. This new tax system would clearly improve:

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

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 an AVERAGE tax rate of:

If the government imposes a $5 excise tax on leather shoes and the price of leather shoes increases by $2:

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.

A(n) _____ tax tends to encourage consumption and discourage saving and investing.

Use the following to answer questions: Figure: The Market for Yachts -(Figure: The Market for Yachts) Look at the figure The Market for Yachts. A quota of _____ will bring about the same price and output in the market for yachts as would an excise tax of $30,000.

If personal income up to and including $25,000 is not taxed, income of $25,001 to $50,000 is taxed at 10%, and income over $50,000 is taxed at 25%, a family earning income equal to $60,000 will pay a marginal tax rate of _____ and an average tax rate of _____.

Deadweight losses arising from an excise tax are greatest when demand:

Use the following to answer questions: Figure: Income Tax Payments -(Figure: Income Tax Payments) Look at the figure Income Tax Payments. Which panel or panels best represent the effects of a proportional income tax?

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

Which of the following taxes is the largest source of government revenue?

How is it that a higher tax rate can increase tax revenue in some cases but decrease it in other cases? Relate this to the price elasticity of demand.

If the government imposes a $5 excise tax on leather shoes and the price of leather shoes does not change:

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

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.

If personal income up to and including $25,000 is not taxed, income of $25,001 to $50,000 is taxed at 10%, and income over $50,000 is taxed at 25%, a family earning income equal to $60,000 will pay a marginal tax rate of _ and an average tax rate of _.

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