Question 1

When each taxpayer pays the same average tax rate regardless of the taxpayer's income,the tax is

Accepted Answer

A)  a regressive tax. 
B)  a progressive tax. 
C)  an estate tax. 
D)  a proportional tax. 
E)  an efficient-price tax. 
A)  a regressive tax. 
B)  a progressive tax. 
C)  an estate tax. 
D)  a proportional tax. 
E)  an efficient-price tax.

Question 2

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.
-Based on the figure above,the tax ________ the price received (and kept)by the seller by ________ per MP3 player.

Accepted Answer

A)  lowers; $5 
B)  raises; $5 
C)  raises; $10 
D)  lowers; $10 
E)  lowers; $2.50 
A)  lowers; $5 
B)  raises; $5 
C)  raises; $10 
D)  lowers; $10 
E)  lowers; $2.50

Question 3

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 4

________ tax is progressive if the ________.

Accepted Answer

A)  An income; average tax rate is constant as income increases 
B)  An income; average tax rate increases with income 
C)  Any; average tax rate is constant as income increases 
D)  Any; average tax rate decreases as income increases 
E)  A social security; tax is imposed on employers rather than workers 
A)  An income; average tax rate is constant as income increases 
B)  An income; average tax rate increases with income 
C)  Any; average tax rate is constant as income increases 
D)  Any; average tax rate decreases as income increases 
E)  A social security; tax is imposed on employers rather than workers

Question 5

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 6

-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 7

Assume that the government passes a tax so that every individual must pay $100.This tax is a

Accepted Answer

A)  progressive tax. 
B)  proportional tax. 
C)  regressive tax. 
D)  marginal tax. 
E)  type of tax that is impossible to determine without more information. 
A)  progressive tax. 
B)  proportional tax. 
C)  regressive tax. 
D)  marginal tax. 
E)  type of tax that is impossible to determine without more information.

Question 8

Which of the following taxes best illustrate the ability-to-pay principle of tax fairness?

Accepted Answer

A)  Tuition at public universities is lower for in-state residents than for out-of-state residents. 
B)  The library is funded through a flat $10 tax levied on all homeowners. 
C)  A property tax that is proportional to the value of a home is used to fund K-12 education. 
D)  Free cholesterol check clinics are funded through a $0.20 tax on all prescriptions. 
E)  A sales tax on food pays for local police and fire protection. 
A)  Tuition at public universities is lower for in-state residents than for out-of-state residents. 
B)  The library is funded through a flat $10 tax levied on all homeowners. 
C)  A property tax that is proportional to the value of a home is used to fund K-12 education. 
D)  Free cholesterol check clinics are funded through a $0.20 tax on all prescriptions. 
E)  A sales tax on food pays for local police and fire protection.

Question 9

The buyers pay all of a tax when the demand is

Accepted Answer

A)  perfectly elastic. 
B)  more elastic than the supply. 
C)  more inelastic than the supply. 
D)  unit elastic. 
E)  perfectly inelastic. 
A)  perfectly elastic. 
B)  more elastic than the supply. 
C)  more inelastic than the supply. 
D)  unit elastic. 
E)  perfectly inelastic.

Question 10

Describe the effects of an increase in the tax on labor income.

Accepted Answer

An increase in the income tax imposed on

Question 11

Suppose that Anthony and Melissa both earn $30,000 and are otherwise the same.If they both pay 10 percent of their income as taxes,then

Accepted Answer

A)  the income tax is regressive. 
B)  the benefits principle of fairness has been achieved. 
C)  horizontal equity has been achieved. 
D)  proportional equity has been achieved. 
E)  vertical equity has been achieved. 
A)  the income tax is regressive. 
B)  the benefits principle of fairness has been achieved. 
C)  horizontal equity has been achieved. 
D)  proportional equity has been achieved. 
E)  vertical equity has been achieved.

Question 12

To levy a tax based on the benefits principle to pay for a bridge,the government

Accepted Answer

A)  would impose an income tax instead of a social security tax on workers. 
B)  would impose a social security tax on workers instead of an income tax. 
C)  needs to know each person's benefit from the bridge. 
D)  needs to be able to calculate the deadweight loss of a tax. 
E)  cannot impose the tax on anyone who uses the bridge. 
A)  would impose an income tax instead of a social security tax on workers. 
B)  would impose a social security tax on workers instead of an income tax. 
C)  needs to know each person's benefit from the bridge. 
D)  needs to be able to calculate the deadweight loss of a tax. 
E)  cannot impose the tax on anyone who uses the bridge.

Question 13

-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 quantity of buckets without the tax is ________ and the quantity with the tax is ________.

Accepted Answer

A)  400; 600 
B)  600; 400 
C)  400; 400 
D)  800; 500 
E)  600; 500 
A)  400; 600 
B)  600; 400 
C)  400; 400 
D)  800; 500 
E)  600; 500

Question 14

-The figure above shows the market for gasoline.The government has imposed a tax on gasoline.
a.What is the amount of the tax per gallon of gasoline?
b.How much tax revenue will government collect from this tax?
c.How much of the tax is paid by buyers? How much is paid by sellers? Which is more elastic,the supply or demand for gasoline?

Accepted Answer

a.The tax is $1.50 per gallon,the amount

Question 15

-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 16

The government once imposed a luxury tax on very expensive jewelry.This tax followed the ________ principle.

Accepted Answer

A)  benefits 
B)  ability-to-pay 
C)  vertical equity 
D)  horizontal equity 
E)  fair-tax incidence 
A)  benefits 
B)  ability-to-pay 
C)  vertical equity 
D)  horizontal equity 
E)  fair-tax incidence

Question 17

When a tax is imposed on a good,at the after-tax equilibrium the marginal benefit of the last unit produced ________ the marginal cost.

Accepted Answer

A)  equals 
B)  is greater than 
C)  is less than 
D)  can be calculated but is not comparable to 
E)  The premise of the question is incorrect because after a tax is imposed, it becomes impossible to determine the marginal benefit and the marginal cost. 
A)  equals 
B)  is greater than 
C)  is less than 
D)  can be calculated but is not comparable to 
E)  The premise of the question is incorrect because after a tax is imposed, it becomes impossible to determine the marginal benefit and the marginal cost.

Question 18

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.
-After the tax is imposed,the government collects tax revenue of ________ a week.

Accepted Answer

A)  $20,000 
B)  $10,000 
C)  $50,000 
D)  $60,000 
E)  $40,000 
A)  $20,000 
B)  $10,000 
C)  $50,000 
D)  $60,000 
E)  $40,000

Question 19

What is the marginal tax rate? Average tax rate? Can these rates ever differ?

Accepted Answer

The marginal tax rate is the percentage

Question 20

If the average tax rate remains constant as income changes,the tax is

Accepted Answer

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

When each taxpayer pays the same average tax rate regardless of the taxpayer's income,the tax is

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. -Based on the figure above,the tax the price received (and kept)by the seller by per MP3 player.

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.

tax is progressive if the .

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

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

Assume that the government passes a tax so that every individual must pay $100.This tax is a

Which of the following taxes best illustrate the ability-to-pay principle of tax fairness?

The buyers pay all of a tax when the demand is

Describe the effects of an increase in the tax on labor income.

Suppose that Anthony and Melissa both earn $30,000 and are otherwise the same.If they both pay 10 percent of their income as taxes,then

To levy a tax based on the benefits principle to pay for a bridge,the government

-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 quantity of buckets without the tax is and the quantity with the tax is .

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

The government once imposed a luxury tax on very expensive jewelry.This tax followed the ________ principle.

When a tax is imposed on a good,at the after-tax equilibrium the marginal benefit of the last unit produced ________ the marginal cost.

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. -After the tax is imposed,the government collects tax revenue of ________ a week.

What is the marginal tax rate? Average tax rate? Can these rates ever differ?

If the average tax rate remains constant as income changes,the tax is

Getting Started

The Usand 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

When each taxpayer pays the same average tax rate regardless of the taxpayer's income,the tax is

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.

________ tax is progressive if the ________.

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

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

Assume that the government passes a tax so that every individual must pay $100.This tax is a

Which of the following taxes best illustrate the ability-to-pay principle of tax fairness?

The buyers pay all of a tax when the demand is

Describe the effects of an increase in the tax on labor income.

Suppose that Anthony and Melissa both earn $30,000 and are otherwise the same.If they both pay 10 percent of their income as taxes,then

To levy a tax based on the benefits principle to pay for a bridge,the government

-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 quantity of buckets without the tax is ________ and the quantity with the tax is ________.

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

The government once imposed a luxury tax on very expensive jewelry.This tax followed the ________ principle.

When a tax is imposed on a good,at the after-tax equilibrium the marginal benefit of the last unit produced ________ the marginal cost.

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. -After the tax is imposed,the government collects tax revenue of ________ a week.

What is the marginal tax rate? Average tax rate? Can these rates ever differ?

If the average tax rate remains constant as income changes,the tax is

Getting Started

The Usand 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.

tax is progressive if the .

-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 quantity of buckets without the tax is and the quantity with the tax is .