Exam 8: Taxes

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.What is the tax incidence for this income tax?

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

"The only fair tax is a progressive tax." Comment on this assertion.

The marginal tax rate equals 100 ×

Which of the following taxes best illustrate the benefits principle of tax fairness?

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.

-The above figure shows the market for capital.With the tax on capital income, the interest rate is ________ and firms use ________ million of capital.

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 price (including the tax)paid by the buyer is ________ per MP3 player.

If a tax is placed on tires, then I∙the equilibrium quantity of tires will decrease. Ii∙a deadweight loss will be created. Iii∙the producer surplus will decrease.

-The above figure shows the supply curves in four different markets.If each of the markets has an identical downward sloping demand curve and the same tax is levied on suppliers, which market would produce the largest amount of deadweight loss?

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.

If the demand curve for hamburgers is downward sloping and the supply curve for hamburgers is upward sloping, then a tax imposed on hamburgers ________ the price paid by buyers and ________ the price received by sellers.

-The figure above illustrates the market for antifreeze.Suppose the government decides to impose an $8 sales tax on every gallon of antifreeze sold. a∙In the figure, illustrate the effect the tax has on the market for antifreeze. b∙What is the equilibrium price of a gallon of antifreeze before the tax? What is the price paid by buyers after the tax? c∙What is the equilibrium quantity of antifreeze before the tax? What is the equilibrium quantity after the tax? d∙What is the revenue collected by the government from this tax? e∙Do buyers or sellers bear the largest burden of the tax? f∙Illustrate the deadweight loss created by the tax.

Suppose the demand for Georgia peaches is perfectly elastic.If the supply curve is upward sloping and a tax is imposed on Georgia peaches, then

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

If a $1 sales tax is imposed on the sale of a CD, and neither the demand nor the supply is perfectly elastic or perfectly inelastic, then the price of a CD paid by consumers will

Suppose the elasticity of demand for a product is 0 and elasticity of supply is 1.If the government imposes a tax on the product, then

Suppose the elasticity of demand for Mexican food is 3.00 and the elasticity of supply is 1.20.If the government imposes a sales tax on Mexican food, which of the following occurs? I∙Less Mexican food is purchased by buyers. Ii∙Less Mexican food is produced by sellers. Iii∙The government receives the excess burden as revenue. Iv∙Both the consumer and the producer surplus decrease.

Cigarettes are highly addictive and therefore have a very low elasticity of demand.A $2.00 increase in the national sales tax on cigarettes would likely cause the price paid by buyers of cigarettes to

-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 tax incidence is