Exam 20: Public Finance: Expenditures and Taxes

Joe complains that 32 percent of his income last year went to taxes. He is referring to his

What are the problems encountered in a strict application of the ability-to-pay principle of taxation?

Assume that in year 1 your average tax rate is 10 percent on a taxable income of $10,000. If the marginal tax rate on the next $10,000 of taxable income is 15 percent, what will be the average tax rate if your taxable income rises to $20,000?

The graph represents the market for a product where D ₁ and S ₁ show the initial supply and demand curves, and supply shifts to S ₂ due to a sales tax. The government's tax revenue is represented by area

The supply of meat is more elastic in the long run than in the short run. Ceteris paribus, as time goes by, the burden of a tax on cattle will increasingly be shouldered by the

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of demand for X is unitary (coefficient = 1). If the incidence of the tax is such that the producers of X pay $1.75 of the tax and the consumers pay $0.25, we can conclude that the

Which of the following statements about state lotteries is false?

If the tax on gasoline is increased, gas stations are most likely to pass most of this increase to the consumer if the demand is

Refer to the income tax schedule given in the table. If your taxable income is $4,000, your average tax rate will be

In which of the given market situations will the largest portion of an excise tax of a specified amount per unit of output be borne by buyers?

In which of the given market situations will the burden of a tax be borne more or less equally between buyers and sellers?

The tax rates embodied in the federal personal income tax are such that

Suppose that government imposes a specific excise tax on product X of $2 per unit and that the price elasticity of supply of X is unitary (coefficient = 1). If the incidence of the tax is such that the consumers of X pay $1.85 of the tax and the producers pay $0.15, we can conclude that the

Which of the following statements about specific excise taxes is true?

Refer to the graph. Assume the market for this product is in equilibrium at the intersection of D ₂ and S ₁. The shift in supply from S ₁ to S ₂ is due to an excise tax imposed on the product. The incidence of the tax is

Sales taxes on consumer goods are regressive because poor people consume a larger proportion of their incomes than do rich people.

With a tax of $2,000 on $30,000 of income and $2,000 on $70,000 of income, we can describe the structure of this tax as

Which is the most important source of tax revenue for local governments?

The average tax rate is

The federal payroll (Social Security)tax