Question 1

The deadweight loss from a tax is called the

Accepted Answer

A)  marginal benefit of the tax. 
B)  marginal cost of the tax. 
C)  excess burden of the tax. 
D)  net gain from taxation. 
E)  net loss from taxation. 
A)  marginal benefit of the tax. 
B)  marginal cost of the tax. 
C)  excess burden of the tax. 
D)  net gain from taxation. 
E)  net loss from taxation.

Question 2

-In the figure above,suppose that the government imposes a tax of $4 per pizza.Then,the tax revenue collected by the government equals

Accepted Answer

A)  $240. 
B)  $320. 
C)  $160. 
D)  $120. 
E)  $4. 
A)  $240. 
B)  $320. 
C)  $160. 
D)  $120. 
E)  $4.

Question 3

The 2010 health care reform that expanded public health care coverage for low income individuals by increasing taxes on high income earners.Taking more tax revenue from high income earners reflects

Accepted Answer

A)  the benefits principle because high income earners can more easily bear the burden of taxes. 
B)  the ability-to-pay principle because high income earners can more easily bear the burden of taxes. 
C)  the ability-to-pay principle because high income earners use more public health care services. 
D)  the benefits principle because high income earners use more public health care services. 
E)  a regressive tax system since high income earners will pay a greater dollar amount in taxes. 
A)  the benefits principle because high income earners can more easily bear the burden of taxes. 
B)  the ability-to-pay principle because high income earners can more easily bear the burden of taxes. 
C)  the ability-to-pay principle because high income earners use more public health care services. 
D)  the benefits principle because high income earners use more public health care services. 
E)  a regressive tax system since high income earners will pay a greater dollar amount in taxes.

Question 4

The imposition of a tax on a good enables the government to

Accepted Answer

A)  raise the price received by sellers of the goods that have been taxed. 
B)  lower the price paid by buyers for the goods that have been taxed. 
C)  create a more efficient economic system. 
D)  take part of consumer and producer surplus as tax revenue when the good is purchased. 
E)  decrease the deadweight loss in this market. 
A)  raise the price received by sellers of the goods that have been taxed. 
B)  lower the price paid by buyers for the goods that have been taxed. 
C)  create a more efficient economic system. 
D)  take part of consumer and producer surplus as tax revenue when the good is purchased. 
E)  decrease the deadweight loss in this market.

Question 5

Neither the demand nor the supply of automobiles is perfectly elastic or inelastic.If the government imposes a $1,000 tax on automobiles,then the price of an automobile buyers pay

Accepted Answer

A)  increases by $1,000. 
B)  increases by less than $1,000. 
C)  increases by more than $1,000. 
D)  decreases by $1,000. 
E)  does not change. 
A)  increases by $1,000. 
B)  increases by less than $1,000. 
C)  increases by more than $1,000. 
D)  decreases by $1,000. 
E)  does not change.

Question 6

If the marginal tax rate is 20 percent,and Pearl earns an extra $100,how much must Pearl pay in additional taxes?

Accepted Answer

With a marginal tax

Question 7

A tax for which the average tax rate decreases as income increases is defined as

Accepted Answer

A)  a proportional tax. 
B)  a regressive tax. 
C)  a progressive tax. 
D)  a sales tax. 
E)  an efficient-quantity tax. 
A)  a proportional tax. 
B)  a regressive tax. 
C)  a progressive tax. 
D)  a sales tax. 
E)  an efficient-quantity tax.

Question 8

A sales tax on cigarettes would likely decrease the quantity demanded by a smaller amount

Accepted Answer

A)  for smokers who view cigarettes as a necessity. 
B)  for smokers who are not addicted. 
C)  for smokers with smaller incomes. 
D)  the longer the time elapsed. 
E)  for smokers who view cigarettes as a luxury. 
A)  for smokers who view cigarettes as a necessity. 
B)  for smokers who are not addicted. 
C)  for smokers with smaller incomes. 
D)  the longer the time elapsed. 
E)  for smokers who view cigarettes as a luxury.

Question 9

When governments tax capital income,the equilibrium quantity of capital

Accepted Answer

A)  increases because of the international mobility of capital. 
B)  does not change because the supply of capital is perfectly elastic. 
C)  decreases. 
D)  does not change because the supply of capital is perfectly inelastic. 
E)  might increase or decrease depending on whether the demand for capital is inelastic or elastic. 
A)  increases because of the international mobility of capital. 
B)  does not change because the supply of capital is perfectly elastic. 
C)  decreases. 
D)  does not change because the supply of capital is perfectly inelastic. 
E)  might increase or decrease depending on whether the demand for capital is inelastic or elastic.

Question 10

If highly paid entertainers prefer to perform and would do so even if their pay were much lower,a tax of half of the entertainers' incomes would do which of the following?

Accepted Answer

A)  decrease the amount of entertaining done by moving along a given labor supply curve 
B)  decrease the entertainers' supply of performances 
C)  collect no taxes at all 
D)  not change the quantity supplied of performances 
E)  increase the entertainers' supply of performances as they work more to make up the income they lose in taxes 
A)  decrease the amount of entertaining done by moving along a given labor supply curve 
B)  decrease the entertainers' supply of performances 
C)  collect no taxes at all 
D)  not change the quantity supplied of performances 
E)  increase the entertainers' supply of performances as they work more to make up the income they lose in taxes

Question 11

A tax

Accepted Answer

A)  places a wedge between the price paid by the buyers and the price received by the sellers. 
B)  reduces consumer surplus and producer surplus. 
C)  decreases government spending. 
D)  Both answers A and B are correct. 
E)  None of the above answers are correct. 
A)  places a wedge between the price paid by the buyers and the price received by the sellers. 
B)  reduces consumer surplus and producer surplus. 
C)  decreases government spending. 
D)  Both answers A and B are correct. 
E)  None of the above answers are correct.

Question 12

If taxes are collected on the basis of ability-to-pay and there are two taxpayers with the same income who also are identical in all other respects,which of the following is correct?

Accepted Answer

A)  Vertical equity is impossible between these two taxpayers. 
B)  Vertical equity exists. 
C)  Horizontal equity exists. 
D)  The tax must be proportional. 
E)  The fair-incidence principle is potentially being violated. 
A)  Vertical equity is impossible between these two taxpayers. 
B)  Vertical equity exists. 
C)  Horizontal equity exists. 
D)  The tax must be proportional. 
E)  The fair-incidence principle is potentially being violated.

Question 13

Because the supply of land is perfectly inelastic,when governments tax land,the tax

Accepted Answer

A)  creates a deadweight loss because the supply is fixed. 
B)  decreases both the demand for and the supply of land. 
C)  creates no deadweight loss because the equilibrium quantity is the same as without the tax. 
D)  increases the supply of land because the landlord pays all of the tax. 
E)  decreases the supply of land because the landlord pays all of the tax. 
A)  creates a deadweight loss because the supply is fixed. 
B)  decreases both the demand for and the supply of land. 
C)  creates no deadweight loss because the equilibrium quantity is the same as without the tax. 
D)  increases the supply of land because the landlord pays all of the tax. 
E)  decreases the supply of land because the landlord pays all of the tax.

Question 14

The inefficiency of a sales tax on a good is ultimately the result of the

Accepted Answer

A)  low tax revenue earned by the government relative to the cost of collection. 
B)  wedge between what buyers pay for the good and what sellers receive for the good. 
C)  buyers being unable to avoid paying the tax. 
D)  sellers being unable to avoid paying the tax. 
E)  increase in the consumer surplus that is more than offset by the decrease in the producer surplus. 
A)  low tax revenue earned by the government relative to the cost of collection. 
B)  wedge between what buyers pay for the good and what sellers receive for the good. 
C)  buyers being unable to avoid paying the tax. 
D)  sellers being unable to avoid paying the tax. 
E)  increase in the consumer surplus that is more than offset by the decrease in the producer surplus.

Question 15

The supply of sand is perfectly inelastic and the demand curve for sand is downward sloping.Hence,if a tax on sand is imposed,

Accepted Answer

A)  sand buyers pay the entire tax. 
B)  sand sellers pay the entire tax. 
C)  the tax is split evenly between the buyers and sellers. 
D)  the government pays the entire tax. 
E)  the government collects no tax revenue because the supply is perfectly inelastic. 
A)  sand buyers pay the entire tax. 
B)  sand sellers pay the entire tax. 
C)  the tax is split evenly between the buyers and sellers. 
D)  the government pays the entire tax. 
E)  the government collects no tax revenue because the supply is perfectly inelastic.

Question 16

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 17

Explain under what conditions a sales tax on a specific good would be paid entirely by buyers.

Accepted Answer

Buyers pay all of a tax when t

Question 18

The proposition that people should pay taxes equal to the benefits they receive from public services is known as the

Accepted Answer

A)  ability-to-pay principle. 
B)  progressive tax principle. 
C)  fairness principle. 
D)  benefits principle. 
E)  "he or she who gets, pays" principle. 
A)  ability-to-pay principle. 
B)  progressive tax principle. 
C)  fairness principle. 
D)  benefits principle. 
E)  "he or she who gets, pays" principle.

Question 19

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.
-The tax ________ the price paid by the buyer by ________ per MP3 player.

Accepted Answer

A)  raises; $5 
B)  lowers; $5 
C)  raises; $10 
D)  lowers; $10 
E)  raises; $7.50 
A)  raises; $5 
B)  lowers; $5 
C)  raises; $10 
D)  lowers; $10 
E)  raises; $7.50

Question 20

Neither the demand nor the supply of gasoline is perfectly elastic or inelastic.When the government increases the federal tax on gasoline,the effect on buyers is that the price they pay

Accepted Answer

A)  rises. 
B)  falls. 
C)  does not change. 
D)  rises if the demand is inelastic and falls if the demand is elastic. 
E)  rises if the supply is inelastic and falls if the supply is elastic. 
A)  rises. 
B)  falls. 
C)  does not change. 
D)  rises if the demand is inelastic and falls if the demand is elastic. 
E)  rises if the supply is inelastic and falls if the supply is elastic.

The deadweight loss from a tax is called the

-In the figure above,suppose that the government imposes a tax of $4 per pizza.Then,the tax revenue collected by the government equals

The 2010 health care reform that expanded public health care coverage for low income individuals by increasing taxes on high income earners.Taking more tax revenue from high income earners reflects

The imposition of a tax on a good enables the government to

Neither the demand nor the supply of automobiles is perfectly elastic or inelastic.If the government imposes a $1,000 tax on automobiles,then the price of an automobile buyers pay

If the marginal tax rate is 20 percent,and Pearl earns an extra $100,how much must Pearl pay in additional taxes?

A tax for which the average tax rate decreases as income increases is defined as

A sales tax on cigarettes would likely decrease the quantity demanded by a smaller amount

When governments tax capital income,the equilibrium quantity of capital

If highly paid entertainers prefer to perform and would do so even if their pay were much lower,a tax of half of the entertainers' incomes would do which of the following?

A tax

If taxes are collected on the basis of ability-to-pay and there are two taxpayers with the same income who also are identical in all other respects,which of the following is correct?

Because the supply of land is perfectly inelastic,when governments tax land,the tax

The inefficiency of a sales tax on a good is ultimately the result of the

The supply of sand is perfectly inelastic and the demand curve for sand is downward sloping.Hence,if a tax on sand is imposed,

Which of the following is correct?

Explain under what conditions a sales tax on a specific good would be paid entirely by buyers.

The proposition that people should pay taxes equal to the benefits they receive from public services is known as the

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. -The tax the price paid by the buyer by per MP3 player.

Neither the demand nor the supply of gasoline is perfectly elastic or inelastic.When the government increases the federal tax on gasoline,the effect on buyers is that the price they pay

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 deadweight loss from a tax is called the

-In the figure above,suppose that the government imposes a tax of $4 per pizza.Then,the tax revenue collected by the government equals

The 2010 health care reform that expanded public health care coverage for low income individuals by increasing taxes on high income earners.Taking more tax revenue from high income earners reflects

The imposition of a tax on a good enables the government to

Neither the demand nor the supply of automobiles is perfectly elastic or inelastic.If the government imposes a $1,000 tax on automobiles,then the price of an automobile buyers pay

If the marginal tax rate is 20 percent,and Pearl earns an extra $100,how much must Pearl pay in additional taxes?

A tax for which the average tax rate decreases as income increases is defined as

A sales tax on cigarettes would likely decrease the quantity demanded by a smaller amount

When governments tax capital income,the equilibrium quantity of capital

If highly paid entertainers prefer to perform and would do so even if their pay were much lower,a tax of half of the entertainers' incomes would do which of the following?

A tax

If taxes are collected on the basis of ability-to-pay and there are two taxpayers with the same income who also are identical in all other respects,which of the following is correct?

Because the supply of land is perfectly inelastic,when governments tax land,the tax

The inefficiency of a sales tax on a good is ultimately the result of the

The supply of sand is perfectly inelastic and the demand curve for sand is downward sloping.Hence,if a tax on sand is imposed,

Which of the following is correct?

Explain under what conditions a sales tax on a specific good would be paid entirely by buyers.

The proposition that people should pay taxes equal to the benefits they receive from public services is known as the

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. -The tax ________ the price paid by the buyer by ________ per MP3 player.

Neither the demand nor the supply of gasoline is perfectly elastic or inelastic.When the government increases the federal tax on gasoline,the effect on buyers is that the price they pay

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

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. -The tax the price paid by the buyer by per MP3 player.