Question 1

The incidence of a tax:

Accepted Answer

A)  is a measure of the revenue the government receives from it. 
B)  refers to who writes the check to the government. 
C)  refers to how much of the tax is actually paid by consumers and producers. 
D)  is a measure of the deadweight loss from the tax. 
A)  is a measure of the revenue the government receives from it. 
B)  refers to who writes the check to the government. 
C)  refers to how much of the tax is actually paid by consumers and producers. 
D)  is a measure of the deadweight loss from the tax.

Question 2

Suppose the government decides to fight obesity in America by imposing an excise tax based on the saturated fat content of food. The most likely effect of this tax would be to:

Accepted Answer

A)  lower the profits of ice cream suppliers. 
B)  decrease revenue for the government. 
C)  decrease black market activity. 
D)  raise the profits of ice cream suppliers. 
A)  lower the profits of ice cream suppliers. 
B)  decrease revenue for the government. 
C)  decrease black market activity. 
D)  raise the profits of ice cream suppliers.

Question 3

A regressive tax structure is one in which taxes:

Accepted Answer

A)  rise less than in proportion to income. 
B)  rise more than in proportion to income. 
C)  rise exactly in proportion to income. 
D)  stay the same regardless of income changes. 
A)  rise less than in proportion to income. 
B)  rise more than in proportion to income. 
C)  rise exactly in proportion to income. 
D)  stay the same regardless of income changes.

Question 4

A _____ tax takes a fixed percentage of income, regardless of the level of income.

Accepted Answer

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

Question 5

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 20%, then a family earning an income of $75,000 will pay _____ in personal taxes.

Accepted Answer

A)  $6,000 
B)  $7,500 
C)  $11,250 
D)  $15,000 
A)  $6,000 
B)  $7,500 
C)  $11,250 
D)  $15,000

Question 6

Use the following to answer questions:
Figure: The Market for Music Downloads  
-(Figure: The Market for Music Downloads) Look at the graph The Market for Music Downloads. If the government imposes a tax of $3 in this market, the deadweight loss will equal:

Accepted Answer

A)  $0. 
B)  $22.50. 
C)  $26.25. 
D)  $52.50. 
A)  $0. 
B)  $22.50. 
C)  $26.25. 
D)  $52.50.

Question 7

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 a MARGINAL tax rate of:

Accepted Answer

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

Question 8

Use the following to answer questions:
Figure: The Market for Lattes  
-(Figure: The Market for Lattes) If an excise tax of $2.25 is assessed on each latte, government revenue will be:

Accepted Answer

A)  $225. 
B)  $400. 
C)  $450. 
D)  $1,800. 
A)  $225. 
B)  $400. 
C)  $450. 
D)  $1,800.

Question 9

The structure of the U.S. federal income tax system reflects the _____ principle.

Accepted Answer

A)  efficiency 
B)  ability-to-pay 
C)  benefits 
D)  lump-sum 
A)  efficiency 
B)  ability-to-pay 
C)  benefits 
D)  lump-sum

Question 10

Overall, the taxes collected by the federal government are progressive.

Accepted Answer

A) True 
 B)False

Question 11

A tax of $20 on an income of $200, $40 on an income of $400, and $50 on an income of $500 is:

Accepted Answer

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

Question 12

Use the following to answer questions:  
-(Table: Three Tax Structure Proposals) Look at the table Three Tax Structure Proposals. What percentage of income does an individual pay in taxes under proposal 3 if that individual's pretax income is $100,000?

Accepted Answer

A)  2% 
B)  10% 
C)  20% 
D)  25% 
A)  2% 
B)  10% 
C)  20% 
D)  25%

Question 13

A tax system achieves efficiency when it maximizes the amount of tax paid by the wealthiest citizens.

Accepted Answer

A) True 
 B)False

Question 14

Use the following to answer questions:
Figure and Table: The Market for Taxi Rides    
-(Figure and Table: The Market for Taxi Rides) Look at the figure and table The Market for Taxi Rides. If the government imposes an excise tax of $1 per ride (causing the supply curve to shift upward by that amount), then people who ride taxis will pay _____ of each $1 tax.

Accepted Answer

A)  $1 
B)  $0.50 
C)  $0.25 
D)  $0.00 
A)  $1 
B)  $0.50 
C)  $0.25 
D)  $0.00

Question 15

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, consumer surplus will be reduced by:

Accepted Answer

A)  $175. 
B)  $240. 
C)  $105. 
D)  $90. 
A)  $175. 
B)  $240. 
C)  $105. 
D)  $90.

Question 16

Brianna and Jess must pay an income tax. Both Brianna and Jess pay $1,000 in taxes each year, but Brianna earns $20,000 and Jess earns $10,000. From this information, you can infer that this tax is:

Accepted Answer

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

Question 17

Use the following to answer questions:
Figure: A Market with a Tax  
-(Figure: A Market with a Tax) Look at the 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 18

If demand is perfectly inelastic, the deadweight loss caused by a tax will be zero.

Accepted Answer

A) True 
 B)False

Question 19

What supply and demand conditions cause zero deadweight loss when an excise tax is imposed?

Accepted Answer

If either the supply or the demand curve

Question 20

If the government removed the excise tax on gasoline, assuming that neither demand nor supply is perfectly inelastic, which of the following would NOT occur?

Accepted Answer

A)  an increase in consumer surplus 
B)  an increase in producer surplus 
C)  a decrease in producer surplus 
D)  an increase in total surplus 
A)  an increase in consumer surplus 
B)  an increase in producer surplus 
C)  a decrease in producer surplus 
D)  an increase in total surplus

The incidence of a tax:

Suppose the government decides to fight obesity in America by imposing an excise tax based on the saturated fat content of food. The most likely effect of this tax would be to:

A regressive tax structure is one in which taxes:

A _____ tax takes a fixed percentage of income, regardless of the level of income.

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 20%, then a family earning an income of $75,000 will pay _____ in personal taxes.

Use the following to answer questions: Figure: The Market for Music Downloads -(Figure: The Market for Music Downloads) Look at the graph The Market for Music Downloads. If the government imposes a tax of $3 in this market, the deadweight loss will equal:

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 a MARGINAL tax rate of:

Use the following to answer questions: Figure: The Market for Lattes -(Figure: The Market for Lattes) If an excise tax of $2.25 is assessed on each latte, government revenue will be:

The structure of the U.S. federal income tax system reflects the _____ principle.

Overall, the taxes collected by the federal government are progressive.

A tax of $20 on an income of $200, $40 on an income of $400, and $50 on an income of $500 is:

Use the following to answer questions: -(Table: Three Tax Structure Proposals) Look at the table Three Tax Structure Proposals. What percentage of income does an individual pay in taxes under proposal 3 if that individual's pretax income is $100,000?

A tax system achieves efficiency when it maximizes the amount of tax paid by the wealthiest citizens.

Brianna and Jess must pay an income tax. Both Brianna and Jess pay $1,000 in taxes each year, but Brianna earns $20,000 and Jess earns $10,000. From this information, you can infer that this tax is:

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

If demand is perfectly inelastic, the deadweight loss caused by a tax will be zero.

What supply and demand conditions cause zero deadweight loss when an excise tax is imposed?

If the government removed the excise tax on gasoline, assuming that neither demand nor supply is perfectly inelastic, which of the following would NOT occur?

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

The incidence of a tax:

Suppose the government decides to fight obesity in America by imposing an excise tax based on the saturated fat content of food. The most likely effect of this tax would be to:

A regressive tax structure is one in which taxes:

A _____ tax takes a fixed percentage of income, regardless of the level of income.

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 20%, then a family earning an income of $75,000 will pay _____ in personal taxes.

Use the following to answer questions: Figure: The Market for Music Downloads -(Figure: The Market for Music Downloads) Look at the graph The Market for Music Downloads. If the government imposes a tax of $3 in this market, the deadweight loss will equal:

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 a MARGINAL tax rate of:

Use the following to answer questions: Figure: The Market for Lattes -(Figure: The Market for Lattes) If an excise tax of $2.25 is assessed on each latte, government revenue will be:

The structure of the U.S. federal income tax system reflects the _____ principle.

Overall, the taxes collected by the federal government are progressive.

A tax of $20 on an income of $200, $40 on an income of $400, and $50 on an income of $500 is:

Use the following to answer questions: -(Table: Three Tax Structure Proposals) Look at the table Three Tax Structure Proposals. What percentage of income does an individual pay in taxes under proposal 3 if that individual's pretax income is $100,000?

A tax system achieves efficiency when it maximizes the amount of tax paid by the wealthiest citizens.

Brianna and Jess must pay an income tax. Both Brianna and Jess pay $1,000 in taxes each year, but Brianna earns $20,000 and Jess earns $10,000. From this information, you can infer that this tax is:

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

If demand is perfectly inelastic, the deadweight loss caused by a tax will be zero.

What supply and demand conditions cause zero deadweight loss when an excise tax is imposed?

If the government removed the excise tax on gasoline, assuming that neither demand nor supply is perfectly inelastic, which of the following would NOT occur?

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