Question 1

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

Accepted Answer

A)  progressive taxes. 
B)  regressive taxes. 
C)  horizontal equity. 
D)  vertical equity. 
E)  fair-incidence principle. 
A)  progressive taxes. 
B)  regressive taxes. 
C)  horizontal equity. 
D)  vertical equity. 
E)  fair-incidence principle.

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 burden of the tax

Accepted Answer

A)  is split equally between the buyer and the seller. 
B)  falls mostly on buyers. 
C)  falls mostly on sellers. 
D)  falls entirely on buyers. 
E)  falls entirely on sellers. 
A)  is split equally between the buyer and the seller. 
B)  falls mostly on buyers. 
C)  falls mostly on sellers. 
D)  falls entirely on buyers. 
E)  falls entirely on sellers.

Question 3

For a given supply elasticity,the more inelastic the demand for a good,the larger the share of the tax paid by the

Accepted Answer

A)  buyers. 
B)  sellers. 
C)  participants other than the buyers and sellers. 
D)  government. 
E)  None of the above answers is correct. 
A)  buyers. 
B)  sellers. 
C)  participants other than the buyers and sellers. 
D)  government. 
E)  None of the above answers is correct.

Question 4

Because the supply of land is perfectly inelastic,a tax on land income

Accepted Answer

A)  is paid entirely by the suppliers. 
B)  is paid entirely by the demanders. 
C)  is shared equally between the suppliers and the demanders. 
D)  is shared, but not equally, between the suppliers and the demanders. 
E)  creates a deadweight loss. 
A)  is paid entirely by the suppliers. 
B)  is paid entirely by the demanders. 
C)  is shared equally between the suppliers and the demanders. 
D)  is shared, but not equally, between the suppliers and the demanders. 
E)  creates a deadweight loss.

Question 5

If the average tax rate increases as income increases,then the

Accepted Answer

A)  tax is regressive tax. 
B)  tax is a progressive tax. 
C)  tax is a proportional tax. 
D)  income is tax exempt so that no tax needs to be paid on it. 
E)  marginal tax rate must be falling as income increases. 
A)  tax is regressive tax. 
B)  tax is a progressive tax. 
C)  tax is a proportional tax. 
D)  income is tax exempt so that no tax needs to be paid on it. 
E)  marginal tax rate must be falling as income increases.

Question 6

Which of the following taxes best illustrate the ability-to-pay 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 a flat $10 tax levied on all homeowners. 
C)  A sales tax on food pays for local police and fire protection. 
D)  The WIC program provides food to low income mothers and is funded through the progressive federal income tax. 
E)  State parks are maintained through the state lottery. 
A)  Roads and highways are built and maintained through a tax on gasoline. 
B)  The local library is funded through a flat $10 tax levied on all homeowners. 
C)  A sales tax on food pays for local police and fire protection. 
D)  The WIC program provides food to low income mothers and is funded through the progressive federal income tax. 
E)  State parks are maintained through the state lottery.

Question 7

If the supply of automobiles becomes more inelastic,then a tax on automobiles is

Accepted Answer

A)  paid more by the buyers after the change than before. 
B)  paid more by the sellers after the change than before. 
C)  always split evenly between the buyers and the sellers. 
D)  paid more by the government after the change than before. 
E)  always paid entirely by the buyers. 
A)  paid more by the buyers after the change than before. 
B)  paid more by the sellers after the change than before. 
C)  always split evenly between the buyers and the sellers. 
D)  paid more by the government after the change than before. 
E)  always paid entirely by the buyers.

Question 8

If the supply of capital is perfectly ________ end up paying the tax on capital income.

Accepted Answer

A)  elastic, lenders 
B)  elastic, firms that demand capital 
C)  inelastic, lenders 
D)  inelastic, firms that demand capital 
E)  unit elastic, firms that demand capital 
A)  elastic, lenders 
B)  elastic, firms that demand capital 
C)  inelastic, lenders 
D)  inelastic, firms that demand capital 
E)  unit elastic, firms that demand capital

Question 9

Tax incidence is the

Accepted Answer

A)  dollar amount of a tax, expressed as a percentage of the purchase price. 
B)  dollar amount of a tax per unit sold. 
C)  division of a tax burden between the buyer and seller. 
D)  amount of revenue collected by government on a specific good. 
E)  deadweight loss from the tax. 
A)  dollar amount of a tax, expressed as a percentage of the purchase price. 
B)  dollar amount of a tax per unit sold. 
C)  division of a tax burden between the buyer and seller. 
D)  amount of revenue collected by government on a specific good. 
E)  deadweight loss from the tax.

Question 10

What are the similarities and differences between horizontal and vertical equity?

Accepted Answer

Both horizontal and vertical equity invo

Question 11

Which resource has the least elastic supply?

Accepted Answer

A)  labor 
B)  capital 
C)  land 
D)  money 
E)  taxes 
A)  labor 
B)  capital 
C)  land 
D)  money 
E)  taxes

Question 12

If neither the demand nor the supply for goods or labor is perfectly inelastic,then a sales tax on a good ________ a deadweight loss and an income tax ________ a deadweight loss.

Accepted Answer

A)  creates; creates 
B)  creates; does not create 
C)  does not create; create 
D)  does not create; does not create 
E)  might create; might create 
A)  creates; creates 
B)  creates; does not create 
C)  does not create; create 
D)  does not create; does not create 
E)  might create; might create

Question 13

Suppose everybody paid the same total amount of tax regardless of their income.This type of tax system would be

Accepted Answer

A)  regressive. 
B)  proportional. 
C)  progressive. 
D)  marginal. 
E)  efficient. 
A)  regressive. 
B)  proportional. 
C)  progressive. 
D)  marginal. 
E)  efficient.

Question 14

For the United States,which tax is the single biggest source of tax revenue?

Accepted Answer

A)  Social Security tax 
B)  sales tax 
C)  property tax 
D)  personal income tax 
E)  corporation income tax 
A)  Social Security tax 
B)  sales tax 
C)  property tax 
D)  personal income tax 
E)  corporation income tax

Question 15

The ability-to-pay principle of tax fairness is equivalent to which of the following?

Accepted Answer

A)  collect taxes from those who benefit the most from provision of public services 
B)  more taxes should be collected from people who can more easily bear the burden 
C)  a regressive income tax structure 
D)  a proportional income tax structure 
E)  concern about only horizontal equity and no concern about vertical equity 
A)  collect taxes from those who benefit the most from provision of public services 
B)  more taxes should be collected from people who can more easily bear the burden 
C)  a regressive income tax structure 
D)  a proportional income tax structure 
E)  concern about only horizontal equity and no concern about vertical equity

Question 16

Taxes on labor income ________ a deadweight loss and ________ the supply of labor.

Accepted Answer

A)  create; decrease 
B)  do not create; increase 
C)  create; increase 
D)  do not create; decrease 
E)  create; do not change 
A)  create; decrease 
B)  do not create; increase 
C)  create; increase 
D)  do not create; decrease 
E)  create; do not change

Question 17

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 18

The assertion that people with the same ability to pay taxes should pay the same amount in taxes best represents the idea of

Accepted Answer

A)  horizontal equity. 
B)  vertical equity. 
C)  the benefits principle of tax fairness. 
D)  fairness principle of taxation. 
E)  benefits paid principle of taxation. 
A)  horizontal equity. 
B)  vertical equity. 
C)  the benefits principle of tax fairness. 
D)  fairness principle of taxation. 
E)  benefits paid principle of taxation.

Question 19

If Congress wanted to change the social security tax so that firms paid most of the tax,they would need to

Accepted Answer

A)  change the tax laws so that all of the social security tax was imposed on firms. 
B)  change the tax laws so that all of the social security tax was imposed on workers. 
C)  change the tax laws so that more than 50 percent of the social security tax was imposed on firms. 
D)  change the tax laws so that more than 50 percent of the social security tax was imposed on workers. 
E)  None of the above because the incidence of the social security tax does not depend on the tax laws but instead depends on the elasticities of the demand for labor and the supply of labor. 
A)  change the tax laws so that all of the social security tax was imposed on firms. 
B)  change the tax laws so that all of the social security tax was imposed on workers. 
C)  change the tax laws so that more than 50 percent of the social security tax was imposed on firms. 
D)  change the tax laws so that more than 50 percent of the social security tax was imposed on workers. 
E)  None of the above because the incidence of the social security tax does not depend on the tax laws but instead depends on the elasticities of the demand for labor and the supply of labor.

Question 20

Vertical equity implies that
i.tax rates should be equal for all tax payers.
ii.people with higher income should pay more in taxes.
iii.people with higher incomes should pay a lower average tax rate.

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and ii 
E)  ii and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and ii 
E)  ii and iii

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

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 burden of the tax

For a given supply elasticity,the more inelastic the demand for a good,the larger the share of the tax paid by the

Because the supply of land is perfectly inelastic,a tax on land income

If the average tax rate increases as income increases,then the

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

If the supply of automobiles becomes more inelastic,then a tax on automobiles is

If the supply of capital is perfectly ________ end up paying the tax on capital income.

Tax incidence is the

What are the similarities and differences between horizontal and vertical equity?

Which resource has the least elastic supply?

If neither the demand nor the supply for goods or labor is perfectly inelastic,then a sales tax on a good a deadweight loss and an income tax a deadweight loss.

Suppose everybody paid the same total amount of tax regardless of their income.This type of tax system would be

For the United States,which tax is the single biggest source of tax revenue?

The ability-to-pay principle of tax fairness is equivalent to which of the following?

Taxes on labor income a deadweight loss and the supply of labor.

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

The assertion that people with the same ability to pay taxes should pay the same amount in taxes best represents the idea of

If Congress wanted to change the social security tax so that firms paid most of the tax,they would need to

Vertical equity implies that i.tax rates should be equal for all tax payers. ii.people with higher income should pay more in taxes. iii.people with higher incomes should pay a lower average tax rate.

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

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

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 burden of the tax

For a given supply elasticity,the more inelastic the demand for a good,the larger the share of the tax paid by the

Because the supply of land is perfectly inelastic,a tax on land income

If the average tax rate increases as income increases,then the

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

If the supply of automobiles becomes more inelastic,then a tax on automobiles is

If the supply of capital is perfectly ________ end up paying the tax on capital income.

Tax incidence is the

What are the similarities and differences between horizontal and vertical equity?

Which resource has the least elastic supply?

If neither the demand nor the supply for goods or labor is perfectly inelastic,then a sales tax on a good ________ a deadweight loss and an income tax ________ a deadweight loss.

Suppose everybody paid the same total amount of tax regardless of their income.This type of tax system would be

For the United States,which tax is the single biggest source of tax revenue?

The ability-to-pay principle of tax fairness is equivalent to which of the following?

Taxes on labor income ________ a deadweight loss and ________ the supply of labor.

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

The assertion that people with the same ability to pay taxes should pay the same amount in taxes best represents the idea of

If Congress wanted to change the social security tax so that firms paid most of the tax,they would need to

Vertical equity implies that i.tax rates should be equal for all tax payers. ii.people with higher income should pay more in taxes. iii.people with higher incomes should pay a lower average tax rate.

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

If neither the demand nor the supply for goods or labor is perfectly inelastic,then a sales tax on a good a deadweight loss and an income tax a deadweight loss.

Taxes on labor income a deadweight loss and the supply of labor.