Exam 8: Taxes

The figure above shows the demand (D) and supply (S) curves for insulin before any tax is imposed. The government imposes a $0.20 a dose tax on sellers of insulin. -Based on the figure above,at the market equilibrium with the tax,marginal benefit ________ marginal cost,and the quantity of insulin sold is ________.

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

The idea that taxpayers with the same ability to pay a tax should pay the same taxes is called

Consider the market for dining at Mexican restaurants.Suppose the price elasticity of demand for Mexican food is 1.23 and the price elasticity of supply is 0.47.If the government imposes a tax on Mexican food,do buyers or sellers pay most of the tax? Why?

The benefits principle of fairness of taxes is the proposition that

-The figure above shows the market for a life-saving drug.Suppose the government imposes a $150 tax per dose on the drug.Show and describe the impact on the market.Who pays this tax?

-The figure above shows the market for tires.According to the figure,the price elasticity of demand is ________ the price elasticity of supply.

Which of the following is true? i.If supply is perfectly inelastic,the tax creates no deadweight loss. ii.The elasticities of supply and demand,not Congress,determine who pays the income tax. iii.A tax is progressive if the average tax rate falls with income.

The size of the deadweight loss,or excess burden,of a tax depends on the

If the average tax rate ________ as income increases,then the tax is a ________ tax.

Which resource has the least elastic supply?

The benefits principle of fair taxation means that people

-The above figure shows the market for gourmet ice cream.In effort to reduce obesity,government places a $2 tax per gallon on suppliers in this market,shifting the supply curve from S₀ to S₁.The total tax revenue is equal to

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.If there was no income tax,Dave would work ________ hours per year and the wage rate would be ________ per hour.

Income (dollars) Taxespaid in State A (dollars) Taxespaid in State B (dollars) Taxespaid in State C (dollars) Adam 30,000 3,000 3,000 3,000 Aaron 50,000 5,000 7,000 4,000 Fatima 100,000 10,000 20,000 7,000 -Adam,Aaron,and Fatima earn,respectively,$30,000,$50,000 and $100,000 per year.The amount of state income taxes they pay on their income depends on which state they choose to live in.The table above shows how much they would pay in taxes in each state. a.Is the tax in State A progressive,regressive or proportional? b.Is the tax in State B progressive,regressive or proportional? c.Is the tax in State C progressive,regressive or proportional?

Neither the demand nor the supply of sugar is perfectly elastic or inelastic.If the government imposes a 5 percent tax on sugar,the

To determine who bears the greater share of a tax,we compare the

-The above figure shows the market for gourmet ice cream.In effort to reduce obesity,government places a $2 tax per gallon on suppliers in this market,shifting the supply curve from S₀ to S₁.The quantity of ice cream consumed before the tax is ________ gallons and the quantity consumed after the tax is ________ gallons.

We can see the inefficiencies created by a sales tax because

For a given elasticity of demand,the less elastic the supply,the