Question 1

If the demand curve for a good is horizontal,a tax is levied on this product is

Accepted Answer

A)  split between the buyers and the sellers but not evenly so that either the buyer or the seller pays more. 
B)  split evenly between the buyers and the sellers. 
C)  paid entirely by buyers. 
D)  paid entirely by sellers. 
E)  not paid by either the buyers or the sellers. 
A)  split between the buyers and the sellers but not evenly so that either the buyer or the seller pays more. 
B)  split evenly between the buyers and the sellers. 
C)  paid entirely by buyers. 
D)  paid entirely by sellers. 
E)  not paid by either the buyers or the sellers.

Question 2

"The only fair tax is a progressive tax." Comment on this assertion.

Accepted Answer

There are many more sides to fairness be

Question 3

If there is an income tax levied on labor income,the labor demand curve ________ and the labor supply curve ________.

Accepted Answer

A)  shifts rightward; does not shift 
B)  shifts leftward; does not shift 
C)  does not shift; shifts rightward 
D)  does not shift; shifts leftward 
E)  shifts leftward; shifts leftward 
A)  shifts rightward; does not shift 
B)  shifts leftward; does not shift 
C)  does not shift; shifts rightward 
D)  does not shift; shifts leftward 
E)  shifts leftward; shifts leftward

Question 4

The demand for gasoline is inelastic and the supply of gasoline is elastic.Therefore,

Accepted Answer

A)  sellers bear most of the incidence of a tax on gasoline. 
B)  buyers bear most of the incidence of a tax on gasoline. 
C)  the government bears most of the incidence of a tax on gasoline. 
D)  the incidence of a tax on gasoline depends if the tax is imposed on sellers or on buyers. 
E)  None of the above answers is correct. 
A)  sellers bear most of the incidence of a tax on gasoline. 
B)  buyers bear most of the incidence of a tax on gasoline. 
C)  the government bears most of the incidence of a tax on gasoline. 
D)  the incidence of a tax on gasoline depends if the tax is imposed on sellers or on buyers. 
E)  None of the above answers is correct.

Question 5

-The demand for apple pies is perfectly elastic.If the government taxes apple pies at $1 a pie,then ________.

Accepted Answer

A)  the seller pays the entire tax 
B)  the buyer pays the entire tax 
C)  the seller and the buyer split the tax evenly 
D)  the seller and the buyer split the tax but the seller pays more 
E)  who pays the tax depends on whether the government imposes the tax on pie buyers or on pie sellers 
A)  the seller pays the entire tax 
B)  the buyer pays the entire tax 
C)  the seller and the buyer split the tax evenly 
D)  the seller and the buyer split the tax but the seller pays more 
E)  who pays the tax depends on whether the government imposes the tax on pie buyers or on pie sellers

Question 6

Regardless of whether a tax is imposed on buyers or sellers,it has the same effects: In general,the price paid by the buyers ________ and the price received by the sellers ________.

Accepted Answer

A)  rises; falls 
B)  rises; rises 
C)  falls; rises 
D)  falls; remains the same 
E)  rises; remains the same 
A)  rises; falls 
B)  rises; rises 
C)  falls; rises 
D)  falls; remains the same 
E)  rises; remains the same

Question 7

Which would be a better source of tax revenue for the government,a good with elastic or a good with an inelastic demand? Explain your reasoning.

Accepted Answer

Inelastic goods are better sources of ta

Question 8

The marginal tax rate equals 100 ×

Accepted Answer

A)  (total tax ÷ change in income). 
B)  (change in tax ÷ total income). 
C)  (total tax ÷ total income). 
D)  (change in tax ÷ change in income). 
E)  (average tax rate × total income). 
A)  (total tax ÷ change in income). 
B)  (change in tax ÷ total income). 
C)  (total tax ÷ total income). 
D)  (change in tax ÷ change in income). 
E)  (average tax rate × total income).

Question 9

Sellers bear the entire incidence of a tax on a good.This outcome can occur if

Accepted Answer

A)  supply is perfectly inelastic. 
B)  the good is an inferior good. 
C)  demand is perfectly inelastic. 
D)  the demand curve is downward sloping and the supply curve is upward sloping. 
E)  supply is perfectly elastic. 
A)  supply is perfectly inelastic. 
B)  the good is an inferior good. 
C)  demand is perfectly inelastic. 
D)  the demand curve is downward sloping and the supply curve is upward sloping. 
E)  supply is perfectly elastic.

Question 10

Which of the following taxes best illustrates the benefits principle of taxation?

Accepted Answer

A)  sales tax on clothing used to fund food stamps 
B)  state income tax used to fund state universities 
C)  Medicare tax imposed on all workers used to fund medical care for the elderly 
D)  gasoline tax used to fund road repairs 
E)  federal income tax used to fund NASA spending 
A)  sales tax on clothing used to fund food stamps 
B)  state income tax used to fund state universities 
C)  Medicare tax imposed on all workers used to fund medical care for the elderly 
D)  gasoline tax used to fund road repairs 
E)  federal income tax used to fund NASA spending

Question 11

What is the difference in the tax incidence between imposing the Social Security tax on workers and imposing the same tax on employers?

Accepted Answer

There is no difference; the ta

Question 12

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.With the income tax,Dave works ________ hours per year and his after-tax wage rate is ________ per hour.

Accepted Answer

A)  2000; $28 
B)  1500; $28 
C)  2000; $30 
D)  1500; $30 
E)  1500; $27 
A)  2000; $28 
B)  1500; $28 
C)  2000; $30 
D)  1500; $30 
E)  1500; $27

Question 13

Which of the following is correct?

Accepted Answer

A)  If your income is $20,000 and you are paying $2,000 in taxes, your marginal tax rate is 10 percent. 
B)  If your income is $20,000 and you are paying $2,000 in income taxes, the income tax you are paying is progressive. 
C)  If you paid $0.39 as tax from an additional dollar you earned, your marginal tax rate is 39 percent. 
D)  If your marginal tax rate falls as your income increases, the tax is progressive. 
E)  If your income is $20,000 and you are paying $2,000 in income taxes, the income tax you are paying is proportional. 
A)  If your income is $20,000 and you are paying $2,000 in taxes, your marginal tax rate is 10 percent. 
B)  If your income is $20,000 and you are paying $2,000 in income taxes, the income tax you are paying is progressive. 
C)  If you paid $0.39 as tax from an additional dollar you earned, your marginal tax rate is 39 percent. 
D)  If your marginal tax rate falls as your income increases, the tax is progressive. 
E)  If your income is $20,000 and you are paying $2,000 in income taxes, the income tax you are paying is proportional.

Question 14

A tax imposed on a resource's income is paid by both the resource's owners and the resource's employers,except for a tax

Accepted Answer

A)  on labor income. 
B)  on the income of capital. 
C)  on land rent. 
D)  that is imposed on employers. 
E)  that is imposed on employees. 
A)  on labor income. 
B)  on the income of capital. 
C)  on land rent. 
D)  that is imposed on employers. 
E)  that is imposed on employees.

Question 15

The 2010 health care reform included a 10 percent tax on indoor tanning services.This tax would reflect ________ if indoor tanning leads to higher usage of government paid health care services from skin cancer.

Accepted Answer

A)  the benefits principle of taxation 
B)  the ability-to-pay principle of taxation 
C)  horizontal equity 
D)  vertical equity 
E)  a regressive tax 
A)  the benefits principle of taxation 
B)  the ability-to-pay principle of taxation 
C)  horizontal equity 
D)  vertical equity 
E)  a regressive tax

Question 16

If a tax of 5 cents a tomato lowers the price received by tomato sellers by 5 cents a tomato,then the supply of tomatoes is perfectly ________ and the seller pays ________ the tax.

Accepted Answer

A)  inelastic; all 
B)  elastic; all 
C)  inelastic; some of 
D)  inelastic; none of 
E)  elastic; none of 
A)  inelastic; all 
B)  elastic; all 
C)  inelastic; some of 
D)  inelastic; none of 
E)  elastic; none of

Question 17

The percentage of an additional dollar that is paid in tax is called

Accepted Answer

A)  the average tax rate. 
B)  the marginal tax rate. 
C)  a proportional tax. 
D)  a progressive tax. 
E)  a regressive tax. 
A)  the average tax rate. 
B)  the marginal tax rate. 
C)  a proportional tax. 
D)  a progressive tax. 
E)  a regressive tax.

Question 18

How does the elasticity of demand affect the incidence of a tax?

Accepted Answer

For a given elasticity of supp

Question 19

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S₀ to S₁.The total tax revenue is equal to

Accepted Answer

A)  $1,800. 
B)  $600. 
C)  $1,200. 
D)  $900. 
E)  $5,600. 
A)  $1,800. 
B)  $600. 
C)  $1,200. 
D)  $900. 
E)  $5,600.

Question 20

When a tax is imposed on a good,the resulting rise in the equilibrium price is usually less than the amount of the tax itself.Why doesn't the equilibrium price rise by the full amount of the tax?

Accepted Answer

Because firms collect taxes from consume

If the demand curve for a good is horizontal,a tax is levied on this product is

"The only fair tax is a progressive tax." Comment on this assertion.

If there is an income tax levied on labor income,the labor demand curve and the labor supply curve .

The demand for gasoline is inelastic and the supply of gasoline is elastic.Therefore,

-The demand for apple pies is perfectly elastic.If the government taxes apple pies at $1 a pie,then ________.

Regardless of whether a tax is imposed on buyers or sellers,it has the same effects: In general,the price paid by the buyers and the price received by the sellers .

Which would be a better source of tax revenue for the government,a good with elastic or a good with an inelastic demand? Explain your reasoning.

The marginal tax rate equals 100 ×

Sellers bear the entire incidence of a tax on a good.This outcome can occur if

Which of the following taxes best illustrates the benefits principle of taxation?

What is the difference in the tax incidence between imposing the Social Security tax on workers and imposing the same tax on employers?

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.With the income tax,Dave works hours per year and his after-tax wage rate is per hour.

Which of the following is correct?

A tax imposed on a resource's income is paid by both the resource's owners and the resource's employers,except for a tax

The 2010 health care reform included a 10 percent tax on indoor tanning services.This tax would reflect ________ if indoor tanning leads to higher usage of government paid health care services from skin cancer.

If a tax of 5 cents a tomato lowers the price received by tomato sellers by 5 cents a tomato,then the supply of tomatoes is perfectly and the seller pays the tax.

The percentage of an additional dollar that is paid in tax is called

How does the elasticity of demand affect the incidence of a tax?

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S₀ to S₁.The total tax revenue is equal to

When a tax is imposed on a good,the resulting rise in the equilibrium price is usually less than the amount of the tax itself.Why doesn't the equilibrium price rise by the full amount 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

If the demand curve for a good is horizontal,a tax is levied on this product is

"The only fair tax is a progressive tax." Comment on this assertion.

If there is an income tax levied on labor income,the labor demand curve ________ and the labor supply curve ________.

The demand for gasoline is inelastic and the supply of gasoline is elastic.Therefore,

-The demand for apple pies is perfectly elastic.If the government taxes apple pies at $1 a pie,then ________.

Regardless of whether a tax is imposed on buyers or sellers,it has the same effects: In general,the price paid by the buyers ________ and the price received by the sellers ________.

Which would be a better source of tax revenue for the government,a good with elastic or a good with an inelastic demand? Explain your reasoning.

The marginal tax rate equals 100 ×

Sellers bear the entire incidence of a tax on a good.This outcome can occur if

Which of the following taxes best illustrates the benefits principle of taxation?

What is the difference in the tax incidence between imposing the Social Security tax on workers and imposing the same tax on employers?

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.With the income tax,Dave works ________ hours per year and his after-tax wage rate is ________ per hour.

Which of the following is correct?

A tax imposed on a resource's income is paid by both the resource's owners and the resource's employers,except for a tax

The 2010 health care reform included a 10 percent tax on indoor tanning services.This tax would reflect ________ if indoor tanning leads to higher usage of government paid health care services from skin cancer.

If a tax of 5 cents a tomato lowers the price received by tomato sellers by 5 cents a tomato,then the supply of tomatoes is perfectly ________ and the seller pays ________ the tax.

The percentage of an additional dollar that is paid in tax is called

How does the elasticity of demand affect the incidence of a tax?

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S₀ to S₁.The total tax revenue is equal to

When a tax is imposed on a good,the resulting rise in the equilibrium price is usually less than the amount of the tax itself.Why doesn't the equilibrium price rise by the full amount 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

If there is an income tax levied on labor income,the labor demand curve and the labor supply curve .

Regardless of whether a tax is imposed on buyers or sellers,it has the same effects: In general,the price paid by the buyers and the price received by the sellers .

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.With the income tax,Dave works hours per year and his after-tax wage rate is per hour.

If a tax of 5 cents a tomato lowers the price received by tomato sellers by 5 cents a tomato,then the supply of tomatoes is perfectly and the seller pays the tax.