Question 1

Ali earns $20,000 and pays $2,000 in taxes; Maria earns $40,000 and pays $4,000 in taxes.Is this tax progressive,regressive,or proportional?

Accepted Answer

The tax is proportio

Question 2

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of ________ per tire.

Accepted Answer

A)  $10 
B)  $30 
C)  $40 
D)  $60 
E)  None of the above answers is correct. 
A)  $10 
B)  $30 
C)  $40 
D)  $60 
E)  None of the above answers is correct.

Question 3

The figure above shows the market for MP3 players, where S is the supply curve and D is the demand curve before any tax. The government imposes a $10 per unit tax on buyers of MP3 players.
-Based on the figure above,after the tax is imposed,the price received by the seller is ________ per MP3 player.

Accepted Answer

A)  $105 
B)  $100 
C)  $95 
D)  $110 
E)  $90 
A)  $105 
B)  $100 
C)  $95 
D)  $110 
E)  $90

Question 4

The figure above shows the market for MP3 players, where S is the supply curve and D is the demand curve before any tax is imposed. The government imposes a $10 per unit tax on sellers of MP3 players.
-In the figure above,at the market equilibrium with the tax,marginal benefit ________ marginal cost,and the quantity of MP3 players sold is ________.

Accepted Answer

A)  exceeds; inefficient 
B)  is below; inefficient 
C)  is below; efficient 
D)  exceeds; efficient 
E)  equals; efficient 
A)  exceeds; inefficient 
B)  is below; inefficient 
C)  is below; efficient 
D)  exceeds; efficient 
E)  equals; efficient

Question 5

The sales tax in Dutchess County,New York,is 7.5 percent.This sales tax is

Accepted Answer

A)  fair because everyone pays the same tax. 
B)  proportional. 
C)  regressive. 
D)  progressive. 
E)  an example of the benefit principle of taxation. 
A)  fair because everyone pays the same tax. 
B)  proportional. 
C)  regressive. 
D)  progressive. 
E)  an example of the benefit principle of taxation.

Question 6

Consider the two principles of fair taxation,the benefits principle and the ability-to-pay principle.

Accepted Answer

A)  Both state that people should pay taxes according to the benefits they receive from public services. 
B)  Both state that people should pay taxes according to how easily they can bear the burden. 
C)  Both are based on horizontal equity. 
D)  Both present conflicting ideas on the fairness of taxes. 
E)  Both are based on vertical equity. 
A)  Both state that people should pay taxes according to the benefits they receive from public services. 
B)  Both state that people should pay taxes according to how easily they can bear the burden. 
C)  Both are based on horizontal equity. 
D)  Both present conflicting ideas on the fairness of taxes. 
E)  Both are based on vertical equity.

Question 7

Suppose the demand for specialty car license plates is perfectly inelastic and the supply curve for specialty license plates is upward sloping.A tax is imposed on specialty license plates.Which of the following is true?

Accepted Answer

A)  Drivers pay the smallest share of the tax. 
B)  Drivers pay none of the tax. 
C)  Drivers pay all of the tax. 
D)  The government pays all of the tax. 
E)  The government collects nothing in tax revenues. 
A)  Drivers pay the smallest share of the tax. 
B)  Drivers pay none of the tax. 
C)  Drivers pay all of the tax. 
D)  The government pays all of the tax. 
E)  The government collects nothing in tax revenues.

Question 8

-The above figure shows the market for capital.With the tax on capital income,the total tax paid is equal to

Accepted Answer

A)  area C. 
B)  area B. 
C)  area A + area B + area C. 
D)  area C + area D + area G. 
E)  area B + area F. 
A)  area C. 
B)  area B. 
C)  area A + area B + area C. 
D)  area C + area D + area G. 
E)  area B + area F.

Question 9

Compared to taxes on labor income,taxes on capital income generate ________ deadweight loss and are paid by people who generally have the ________ ability to pay.

Accepted Answer

A)  a larger; most 
B)  a larger; least 
C)  a smaller; most 
D)  a smaller; least 
E)  no; least 
A)  a larger; most 
B)  a larger; least 
C)  a smaller; most 
D)  a smaller; least 
E)  no; least

Question 10

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.What is the total income tax Dave pays each year?

Accepted Answer

A)  $1,500 
B)  $4,500 
C)  $3,000 
D)  $40,500 
E)  $45,000 
A)  $1,500 
B)  $4,500 
C)  $3,000 
D)  $40,500 
E)  $45,000

Question 11

A tax that has the same average rate at all levels is

Accepted Answer

A)  a proportional tax. 
B)  a regressive tax. 
C)  a marginal tax. 
D)  a sales tax. 
E)  an efficient-price tax. 
A)  a proportional tax. 
B)  a regressive tax. 
C)  a marginal tax. 
D)  a sales tax. 
E)  an efficient-price tax.

Question 12

If the elasticity of demand for a product equals 3 and the supply is perfectly elastic,then if a tax is imposed on this product,

Accepted Answer

A)  the buyer pays all the tax. 
B)  the seller pays all the tax. 
C)  the buyer pays 3/4 of the tax. 
D)  the seller pays 3/4 of the tax. 
E)  the buyer pays 4/3 of the tax. 
A)  the buyer pays all the tax. 
B)  the seller pays all the tax. 
C)  the buyer pays 3/4 of the tax. 
D)  the seller pays 3/4 of the tax. 
E)  the buyer pays 4/3 of the tax.

Question 13

The proposition that people should pay taxes according to how easily they can bear the burden is known as the ________ principle.

Accepted Answer

A)  regressive tax 
B)  benefits 
C)  ability-to-pay 
D)  fairness 
E)  incidence of fairness 
A)  regressive tax 
B)  benefits 
C)  ability-to-pay 
D)  fairness 
E)  incidence of fairness

Question 14

-The above figure shows the labor market for land surveyors.The total amount collected as taxes equals

Accepted Answer

A)  area B + area C + area E + area F. 
B)  area D + area G. 
C)  area D + area F. 
D)  area B + area C. 
E)  area A. 
A)  area B + area C + area E + area F. 
B)  area D + area G. 
C)  area D + area F. 
D)  area B + area C. 
E)  area A.

Question 15

What is the difference between vertical equity and horizontal equity?

Accepted Answer

Vertical equity is the requirement that

Question 16

If the average tax rate falls as income increases,the tax is

Accepted Answer

A)  progressive. 
B)  proportional. 
C)  regressive. 
D)  vertically unfair. 
E)  impossible to determine with the information given. 
A)  progressive. 
B)  proportional. 
C)  regressive. 
D)  vertically unfair. 
E)  impossible to determine with the information given.

Question 17

Which of the following taxes best illustrate the benefits principle of tax fairness?

Accepted Answer

A)  Roads and highways are built and maintained through a tax on gasoline. 
B)  The local library is funded through property taxes levied on all homeowners. 
C)  The WIC program provides food to low income mothers and is funded through the federal income tax. 
D)  A sales tax on food pays for local police and fire protection. 
E)  City parks are maintained through local excise taxes. 
A)  Roads and highways are built and maintained through a tax on gasoline. 
B)  The local library is funded through property taxes levied on all homeowners. 
C)  The WIC program provides food to low income mothers and is funded through the federal income tax. 
D)  A sales tax on food pays for local police and fire protection. 
E)  City parks are maintained through local excise taxes.

Question 18

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.What is the tax incidence for this income tax?

Accepted Answer

A)  Though the employer pays some of the tax, Dave pays more of the income tax than his employer. 
B)  Dave pays the same amount of the income tax as his employer. 
C)  While Dave pays some of tax, Dave pays less of the income tax than his employer. 
D)  Dave does not pay any tax. 
E)  Dave's employer does not pay any tax. 
A)  Though the employer pays some of the tax, Dave pays more of the income tax than his employer. 
B)  Dave pays the same amount of the income tax as his employer. 
C)  While Dave pays some of tax, Dave pays less of the income tax than his employer. 
D)  Dave does not pay any tax. 
E)  Dave's employer does not pay any tax.

Question 19

In a labor market before any taxes are imposed,the equilibrium wage rate is $10.00 an hour and 10,000 people are employed.The government imposes a 20 percent income tax on workers' incomes.What is the wage rate that workers need to receive so that they can earn $10.00 per hour after the tax is paid? Suppose that after the tax is imposed,the wage rate rises to $12.00 an hour and that only 8,000 workers are employed.How is the tax incidence split between workers and firms?

Accepted Answer

In order to receive a wage of $10.00 an

Question 20

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of ________ per tire and that ________ pay most of the tax.

Accepted Answer

A)  $30; buyers 
B)  $40; buyers 
C)  $30; sellers 
D)  $60; sellers 
E)  $60; buyers 
A)  $30; buyers 
B)  $40; buyers 
C)  $30; sellers 
D)  $60; sellers 
E)  $60; buyers

Ali earns $20,000 and pays $2,000 in taxes; Maria earns $40,000 and pays $4,000 in taxes.Is this tax progressive,regressive,or proportional?

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of ________ per tire.

The sales tax in Dutchess County,New York,is 7.5 percent.This sales tax is

Consider the two principles of fair taxation,the benefits principle and the ability-to-pay principle.

Suppose the demand for specialty car license plates is perfectly inelastic and the supply curve for specialty license plates is upward sloping.A tax is imposed on specialty license plates.Which of the following is true?

-The above figure shows the market for capital.With the tax on capital income,the total tax paid is equal to

Compared to taxes on labor income,taxes on capital income generate deadweight loss and are paid by people who generally have the ability to pay.

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.What is the total income tax Dave pays each year?

A tax that has the same average rate at all levels is

If the elasticity of demand for a product equals 3 and the supply is perfectly elastic,then if a tax is imposed on this product,

The proposition that people should pay taxes according to how easily they can bear the burden is known as the ________ principle.

-The above figure shows the labor market for land surveyors.The total amount collected as taxes equals

What is the difference between vertical equity and horizontal equity?

If the average tax rate falls as income increases,the tax is

Which of the following taxes best illustrate the benefits principle of tax fairness?

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.What is the tax incidence for this income tax?

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of per tire and that pay most of the tax.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 8: Taxes

Ali earns $20,000 and pays $2,000 in taxes; Maria earns $40,000 and pays $4,000 in taxes.Is this tax progressive,regressive,or proportional?

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of ________ per tire.

The sales tax in Dutchess County,New York,is 7.5 percent.This sales tax is

Consider the two principles of fair taxation,the benefits principle and the ability-to-pay principle.

Suppose the demand for specialty car license plates is perfectly inelastic and the supply curve for specialty license plates is upward sloping.A tax is imposed on specialty license plates.Which of the following is true?

-The above figure shows the market for capital.With the tax on capital income,the total tax paid is equal to

Compared to taxes on labor income,taxes on capital income generate ________ deadweight loss and are paid by people who generally have the ________ ability to pay.

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.What is the total income tax Dave pays each year?

A tax that has the same average rate at all levels is

If the elasticity of demand for a product equals 3 and the supply is perfectly elastic,then if a tax is imposed on this product,

The proposition that people should pay taxes according to how easily they can bear the burden is known as the ________ principle.

-The above figure shows the labor market for land surveyors.The total amount collected as taxes equals

What is the difference between vertical equity and horizontal equity?

If the average tax rate falls as income increases,the tax is

Which of the following taxes best illustrate the benefits principle of tax fairness?

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.What is the tax incidence for this income tax?

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of ________ per tire and that ________ pay most of the tax.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Compared to taxes on labor income,taxes on capital income generate deadweight loss and are paid by people who generally have the ability to pay.

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of per tire and that pay most of the tax.