Question 1

Figure 17-5 shows the Lorenz curve for a hypothetical country.
-Refer to Figure 17-5. The middle 20 percent of households

Accepted Answer

A)  earn 20 percent of the society's total income. 
B)  earn 36 percent of the society's total income. 
C)  earn 48 percent of the society's total income. 
D)  earn 50 percent of the society's total income. 
A)  earn 20 percent of the society's total income. 
B)  earn 36 percent of the society's total income. 
C)  earn 48 percent of the society's total income. 
D)  earn 50 percent of the society's total income. A

Question 2

-Refer to Table 17-2. The table above lists three policy alternatives that the U.S. Senate will vote on, along with the ranking of these alternates. The Senate must decide which of these alternatives should receive an additional $1 billion of funding, and there is enough money in the federal budget for only one of these alternatives. If a series of votes is taken in which each pair of alternatives is considered (homeland security and education; homeland security and medical research; education and medical research) which of the following will result from these votes?

Accepted Answer

A)  When the vote is between homeland security and education, the Senators will vote for education to receive funding. 
B)  The Senators' votes will demonstrate transitivity. 
C)  The results will illustrate the voting paradox. 
D)  The results from the voting will illustrate the median voter theorem. 
A)  When the vote is between homeland security and education, the Senators will vote for education to receive funding. 
B)  The Senators' votes will demonstrate transitivity. 
C)  The results will illustrate the voting paradox. 
D)  The results from the voting will illustrate the median voter theorem. C

Question 3

Is a typical person likely to gather more information when buying a new computer or when voting for a member of the U.S. Senate? Why?

Accepted Answer

The typical person is likely to gather more information when buying a new computer as he or she will be significantly and immediately affected by this decision. When voting for a member of the Senate, the person is only one of many voters and his or her vote is therefore diluted among all other votes and is likely to have very little impact. Because of this, there is little incentive to invest the time and energy to gather information about the candidates.

Question 4

Figure 17-2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 17-2. If the government imposes an excise tax of $1.00 on every unit sold, the government's revenue from the tax is represented by the area

Accepted Answer

A)  (PaPc × Qa) if the supply curve is S0 and (PbPc × Qb) if the supply curve is S1. 
B)  (PaPd × Qa) if the supply curve is S0 and (PbPe × Qb) if the supply curve is S1. 
C)  (PaPe × Qa) under either supply curve. 
D)  (PbPe × Qb) under either supply curve. 
A)  (PaPc × Qa) if the supply curve is S0 and (PbPc × Qb) if the supply curve is S1. 
B)  (PaPd × Qa) if the supply curve is S0 and (PbPe × Qb) if the supply curve is S1. 
C)  (PaPe × Qa) under either supply curve. 
D)  (PbPe × Qb) under either supply curve.

Question 5

-Refer to Figure 17-9 to answer the following questions.
a. Did the distribution of income become more equal in 2020 that it was in 2019, or did it become less equal? Explain.
b. If area A = 1,600, area B = 200, and area C = 3,200, calculate the Gini coefficient for 2019 and the Gini coefficient for 2020.

Accepted Answer

a. The distribution of income became mor

Question 6

-Refer to Figure 17-1. Area E + H represents

Accepted Answer

A)  the portion of sales tax revenue borne by consumers. 
B)  the portion of sales tax revenue borne by producers. 
C)  the excess burden of the sales tax. 
D)  sales tax revenue collected by the government. 
A)  the portion of sales tax revenue borne by consumers. 
B)  the portion of sales tax revenue borne by producers. 
C)  the excess burden of the sales tax. 
D)  sales tax revenue collected by the government.

Question 7

-Refer to Figure 17-1. Of the tax revenue collected by the government, the portion borne by consumers is represented by the area

Accepted Answer

A)  B + C. 
B)  F + G. 
C)  E + H. 
D)  B + C + F + G. 
A)  B + C. 
B)  F + G. 
C)  E + H. 
D)  B + C + F + G.

Question 8

Suppose $1 billion is available in the budget and Congress is considering allocating the funds to one of the following three alternatives: 1) Subsidies for education, 2) Research on Alzheimer's or 3) Increased border security. Table 17-1 shows three voters' rankings of the alternatives.
-Refer to Table 17-1. Suppose a series of votes are taken in which each pair of alternatives is considered in turn. The first pair considered is between subsidies for education and research on Alzheimer's. The second pair considered is between Alzheimer's research and increased border security. The third pair considered is between education subsidies and increased border security. In this case, the collective preferences of the voters

Accepted Answer

A)  turn out to be transitive and will yield a consistent outcome. 
B)  turn out to be transitive but will not result in a consistent outcome. 
C)  turn out not to be transitive and will not result in a consistent outcome. 
D)  turn out not to be transitive but will yield a consistent outcome. 
A)  turn out to be transitive and will yield a consistent outcome. 
B)  turn out to be transitive but will not result in a consistent outcome. 
C)  turn out not to be transitive and will not result in a consistent outcome. 
D)  turn out not to be transitive but will yield a consistent outcome.

Question 9

Studies by the U.S. Census Bureau have shown that

Accepted Answer

A)  families remain below the poverty line for an average of five years. 
B)  there is significant income mobility in the U.S. over time. 
C)  income mobility in the U.S. is minimal. 
D)  over half the people below the poverty line never move out of poverty. 
A)  families remain below the poverty line for an average of five years. 
B)  there is significant income mobility in the U.S. over time. 
C)  income mobility in the U.S. is minimal. 
D)  over half the people below the poverty line never move out of poverty.

Question 10

-Refer to Figure 17-1. The excess burden of the tax is represented by the area

Accepted Answer

A)  B + C. 
B)  F + G. 
C)  E + H. 
D)  B + C + F + G. 
A)  B + C. 
B)  F + G. 
C)  E + H. 
D)  B + C + F + G.

Question 11

-Refer to Table 17-4. The table above outlines the rankings of three members of the U.S. House of Representatives on three spending alternatives. Assume that Congress can spend additional revenue on only one of the three spending alternatives and that Tom, Dick, and Harriet, all members of the House of Representatives, participate in a series of votes in which they are to determine which of the spending alternatives should receive funding. Three votes will be taken: (1) Foreign Aid and Post-Secondary Education (2) Foreign Aid and Roads and Bridges and (3) Post-Secondary Education and Roads and Bridges. 
Determine whether the voting paradox will occur as a result of these votes.

Accepted Answer

First vote:
@#IMG-DLM&
First vote: the majority vo

Question 12

If you pay $2,000 in taxes on an income of $20,000, and a tax of $3,000 on an income of $30,000, then over this range of income the tax is

Accepted Answer

A)  regressive. 
B)  proportional. 
C)  progressive. 
D)  There is insufficient information to answer the question. 
A)  regressive. 
B)  proportional. 
C)  progressive. 
D)  There is insufficient information to answer the question.

Question 13

Income inequality in the United States has increased somewhat over the past 30 years. Two factors that appear to have contributed to this are

Accepted Answer

A)  tax cuts on high-income individuals and large increases in prices of stocks. 
B)  strong economic growth and low inflation. 
C)  rapid technological change and expanding international trade. 
D)  outsourcing of jobs by U.S. firms and cuts in taxes on capital gains. 
A)  tax cuts on high-income individuals and large increases in prices of stocks. 
B)  strong economic growth and low inflation. 
C)  rapid technological change and expanding international trade. 
D)  outsourcing of jobs by U.S. firms and cuts in taxes on capital gains.

Question 14

Figure 17-7 shows the Lorenz curve for a hypothetical country.
-Refer to Figure 17-7. The second highest 20 percent of households

Accepted Answer

A)  earn 24 percent of the society's total income. 
B)  earn 28 percent of the society's total income. 
C)  earn 42 percent of the society's total income. 
D)  earn 72 percent of the society's total income. 
A)  earn 24 percent of the society's total income. 
B)  earn 28 percent of the society's total income. 
C)  earn 42 percent of the society's total income. 
D)  earn 72 percent of the society's total income.

Question 15

-Refer to Table 17-10. A tax exemption is granted for the first $10,000 earned per year. Suppose you earn $75,000.
a. What is the amount of taxes you will pay?
b. What is your average tax rate?
c. What is your marginal tax rate?

Accepted Answer

a. ($6,000 × 0.10) + ($14,000

Question 16

-Refer to Table 17-6. Sasha is a single taxpayer with an income of $60,000. What is his marginal tax rate and what is his average tax rate?

Accepted Answer

A)  marginal tax rate = 38%; average tax rate = 23% 
B)  marginal tax rate = 17%; average tax rate = 21% 
C)  marginal tax rate = 38%; average tax rate = 24% 
D)  marginal tax rate = 23%; average tax rate = 38% 
A)  marginal tax rate = 38%; average tax rate = 23% 
B)  marginal tax rate = 17%; average tax rate = 21% 
C)  marginal tax rate = 38%; average tax rate = 24% 
D)  marginal tax rate = 23%; average tax rate = 38%

Question 17

Figure 17-2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 17-2. If the government imposes an excise tax of $1.00 on every unit sold, what is the size of the deadweight loss, if there is any?

Accepted Answer

A)  the area adc if the supply curve is S0 and the area bec if the supply curve is S1. 
B)  the area afcd if the supply curve is S0 and the area bfce if the supply curve is S1. 
C)  the area becf under either supply curve. 
D)  There is no deadweight loss; revenue raised is used to fund government projects. 
A)  the area adc if the supply curve is S0 and the area bec if the supply curve is S1. 
B)  the area afcd if the supply curve is S0 and the area bfce if the supply curve is S1. 
C)  the area becf under either supply curve. 
D)  There is no deadweight loss; revenue raised is used to fund government projects.

Question 18

Figure 17-6 shows the Lorenz curves for Islandia and Syldavia.
-Refer to Figure 17-6. If area X = 2,060, area Y = 240, and area Z= 2,700, calculate the Gini coefficient for Syldavia.

Accepted Answer

A)  0.05 
B)  0.12 
C)  0.46 
D)  0.85 
A)  0.05 
B)  0.12 
C)  0.46 
D)  0.85

Question 19

-Refer to Table 17-5. The tax system is

Accepted Answer

A)  progressive throughout all levels of income. 
B)  proportional throughout all levels of income. 
C)  regressive throughout all levels of income. 
D)  regressive between $20,000 and $25,000 of income and progressive between $32,000 and $42,000. 
A)  progressive throughout all levels of income. 
B)  proportional throughout all levels of income. 
C)  regressive throughout all levels of income. 
D)  regressive between $20,000 and $25,000 of income and progressive between $32,000 and $42,000.

Question 20

Figure 17-2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 17-2. If the government imposes an excise tax of $1.00 on every unit sold

Accepted Answer

A)  the deadweight loss is identical under either supply curve. 
B)  the deadweight loss is greater under the supply curve S1. 
C)  the deadweight loss is greater under the supply curve S0. 
D)  there is no deadweight loss since revenue raised is used to fund government projects. 
A)  the deadweight loss is identical under either supply curve. 
B)  the deadweight loss is greater under the supply curve S1. 
C)  the deadweight loss is greater under the supply curve S0. 
D)  there is no deadweight loss since revenue raised is used to fund government projects.

Figure 17-5 shows the Lorenz curve for a hypothetical country. -Refer to Figure 17-5. The middle 20 percent of households

Is a typical person likely to gather more information when buying a new computer or when voting for a member of the U.S. Senate? Why?

Figure 17-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 17-2. If the government imposes an excise tax of $1.00 on every unit sold, the government's revenue from the tax is represented by the area

-Refer to Figure 17-1. Area E + H represents

-Refer to Figure 17-1. Of the tax revenue collected by the government, the portion borne by consumers is represented by the area

Studies by the U.S. Census Bureau have shown that

-Refer to Figure 17-1. The excess burden of the tax is represented by the area

If you pay $2,000 in taxes on an income of $20,000, and a tax of $3,000 on an income of $30,000, then over this range of income the tax is

Income inequality in the United States has increased somewhat over the past 30 years. Two factors that appear to have contributed to this are

Figure 17-7 shows the Lorenz curve for a hypothetical country. -Refer to Figure 17-7. The second highest 20 percent of households

-Refer to Table 17-10. A tax exemption is granted for the first $10,000 earned per year. Suppose you earn $75,000. a. What is the amount of taxes you will pay? b. What is your average tax rate? c. What is your marginal tax rate?

-Refer to Table 17-6. Sasha is a single taxpayer with an income of $60,000. What is his marginal tax rate and what is his average tax rate?

Figure 17-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 17-2. If the government imposes an excise tax of $1.00 on every unit sold, what is the size of the deadweight loss, if there is any?

Figure 17-6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 17-6. If area X = 2,060, area Y = 240, and area Z= 2,700, calculate the Gini coefficient for Syldavia.

-Refer to Table 17-5. The tax system is

Figure 17-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 17-2. If the government imposes an excise tax of $1.00 on every unit sold

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: The Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labor and Other Factors of Production

Filters

Exam 17: Public Choice, Taxes, and the Distribution of Income

Figure 17-5 shows the Lorenz curve for a hypothetical country. -Refer to Figure 17-5. The middle 20 percent of households

Is a typical person likely to gather more information when buying a new computer or when voting for a member of the U.S. Senate? Why?

Figure 17-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 17-2. If the government imposes an excise tax of $1.00 on every unit sold, the government's revenue from the tax is represented by the area

-Refer to Figure 17-1. Area E + H represents

-Refer to Figure 17-1. Of the tax revenue collected by the government, the portion borne by consumers is represented by the area

Studies by the U.S. Census Bureau have shown that

-Refer to Figure 17-1. The excess burden of the tax is represented by the area

If you pay $2,000 in taxes on an income of $20,000, and a tax of $3,000 on an income of $30,000, then over this range of income the tax is

Income inequality in the United States has increased somewhat over the past 30 years. Two factors that appear to have contributed to this are

Figure 17-7 shows the Lorenz curve for a hypothetical country. -Refer to Figure 17-7. The second highest 20 percent of households

-Refer to Table 17-10. A tax exemption is granted for the first $10,000 earned per year. Suppose you earn $75,000. a. What is the amount of taxes you will pay? b. What is your average tax rate? c. What is your marginal tax rate?

-Refer to Table 17-6. Sasha is a single taxpayer with an income of $60,000. What is his marginal tax rate and what is his average tax rate?

Figure 17-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 17-2. If the government imposes an excise tax of $1.00 on every unit sold, what is the size of the deadweight loss, if there is any?

Figure 17-6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 17-6. If area X = 2,060, area Y = 240, and area Z= 2,700, calculate the Gini coefficient for Syldavia.

-Refer to Table 17-5. The tax system is

Figure 17-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 17-2. If the government imposes an excise tax of $1.00 on every unit sold

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: The Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: The Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labor and Other Factors of Production

Filters