Question 1

Suppose the demand for barley is perfectly elastic.The supply curve of barley is upward sloping.If a tax is imposed on barley,

Accepted Answer

A) barley sellers pay the entire tax. 
B) barley buyers pay the entire tax. 
C) the government pays the entire tax. 
D) the tax is split evenly between barley buyers and sellers. 
E) who pays the tax depends on whether the government imposes the tax on barley sellers or on barley buyers. 
A) barley sellers pay the entire tax. 
B) barley buyers pay the entire tax. 
C) the government pays the entire tax. 
D) the tax is split evenly between barley buyers and sellers. 
E) who pays the tax depends on whether the government imposes the tax on barley sellers or on barley buyers.

Question 2

The deadweight loss of a tax on labor income is

Accepted Answer

A) larger for high-wage workers than for low-wage workers. 
B) not part of the total burden of a tax. 
C) not a burden workers do not pay that tax. 
D) zero for all workers because the supply of labor is perfectly inelastic. 
E) zero for low income workers and small for high income workers. 
A) larger for high-wage workers than for low-wage workers. 
B) not part of the total burden of a tax. 
C) not a burden workers do not pay that tax. 
D) zero for all workers because the supply of labor is perfectly inelastic. 
E) zero for low income workers and small for high income workers.

Question 3

Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic.If the federal government eliminated the 18.4 cents per gallon gasoline tax, the price paid by buyers would

Accepted Answer

A) decrease by less than 18.4 cents. 
B) decrease by 18.4 cents. 
C) decrease by more than 18.4 cents. 
D) stay the same. 
E) increase by 18.4 cents. 
A) decrease by less than 18.4 cents. 
B) decrease by 18.4 cents. 
C) decrease by more than 18.4 cents. 
D) stay the same. 
E) increase by 18.4 cents.

Question 4

Tax incidence is the

Accepted Answer

A) burden buyers have to absorb from a tax on goods and services. 
B) burden sellers have to absorb from a tax on goods and services. 
C) lost revenue the government endures from goods and services that are not taxed. 
D) division of the burden of a tax between the buyer and the seller. 
E) deadweight loss created by a tax. 
A) burden buyers have to absorb from a tax on goods and services. 
B) burden sellers have to absorb from a tax on goods and services. 
C) lost revenue the government endures from goods and services that are not taxed. 
D) division of the burden of a tax between the buyer and the seller. 
E) deadweight loss created by a tax.

Question 5

Sales taxes are usually collected from sellers, who view the tax as

Accepted Answer

A) resulting from a leftward of the demand curve. 
B) an additional cost of selling the good. 
C) an addition to the demand for the product. 
D) an addition to profit. 
E) the same as a rightward shift of the demand curve. 
A) resulting from a leftward of the demand curve. 
B) an additional cost of selling the good. 
C) an addition to the demand for the product. 
D) an addition to profit. 
E) the same as a rightward shift of the demand curve.

Question 6

-The above figure shows the market for capital.With the tax on capital income, the deadweight loss is equal to

Accepted Answer

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

Question 7

The supply of oil is more elastic than the demand for oil.If oil is taxed $10 per barrel, how will the tax be divided between the buyer and seller?

Accepted Answer

A) The seller will pay more of the tax than the buyer pays. 
B) The buyer will pay more of the tax than the seller pays. 
C) The seller and buyer will split the tax evenly. 
D) The seller will pay the entire tax. 
E) The buyer will pay the entire tax. 
A) The seller will pay more of the tax than the buyer pays. 
B) The buyer will pay more of the tax than the seller pays. 
C) The seller and buyer will split the tax evenly. 
D) The seller will pay the entire tax. 
E) The buyer will pay the entire tax.

Question 8

-The above figure shows the labor market for land surveyors.The deadweight loss from the tax is equal to

Accepted Answer

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

Question 9

-The figure above shows the market for tickets to the Super Bowl the day of the game.Suppose the government imposes an entertainment tax of $100 per ticket.
a∙What is the equilibrium price of a Super Bowl ticket before the tax? What is the price paid by buyers after the tax? What is the price received by sellers after the tax?
b∙What is the equilibrium quantity of tickets before the tax? What is the equilibrium quantity after the tax?
c∙Do buyers or sellers bear most of the incidence of the tax?

Accepted Answer

a∙The equilibrium price before the tax i

Question 10

-The figure above shows the labor supply and labor demand curves for personal trainers in the state of Florida.The initial equilibrium hourly wage is $10.Suppose the state of Florida institutes an income tax on labor income of $6 an hour in order to buy voting machines for the next election.How much of the tax is paid by employees?

Accepted Answer

A) $0 
B) $2 
C) $4 
D) $6 
E) $600 
A) $0 
B) $2 
C) $4 
D) $6 
E) $600

Question 11

A tax imposed on a resource's income is paid by both the resource's owners and the resource's employers, except for a tax

Accepted Answer

A) on labor income. 
B) on the income of capital. 
C) on land rent. 
D) that is imposed on employers. 
E) that is imposed on employees. 
A) on labor income. 
B) on the income of capital. 
C) on land rent. 
D) that is imposed on employers. 
E) that is imposed on employees.

Question 12

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 13

When a social security tax is imposed on workers, employment ________ and when a social security tax is is imposed on employers, employment ________.

Accepted Answer

A) increases; increases 
B) increases; decreases 
C) decreases; increases 
D) decreases; decreases 
E) decreases; does not change 
A) increases; increases 
B) increases; decreases 
C) decreases; increases 
D) decreases; decreases 
E) decreases; does not change

Question 14

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

Accepted Answer

A) A 
B) B 
C) C 
D) D 
E) C and D 
A) A 
B) B 
C) C 
D) D 
E) C and D

Question 15

The percentage of an additional dollar of income that is paid in tax is the

Accepted Answer

A) sales tax. 
B) capital tax. 
C) marginal tax rate. 
D) personal income tax. 
E) regressive tax. 
A) sales tax. 
B) capital tax. 
C) marginal tax rate. 
D) personal income tax. 
E) regressive tax.

Question 16

The percentage of an additional dollar that is paid in tax is called

Accepted Answer

A) the average tax rate. 
B) the marginal tax rate. 
C) a proportional tax. 
D) a progressive tax. 
E) a regressive tax. 
A) the average tax rate. 
B) the marginal tax rate. 
C) a proportional tax. 
D) a progressive tax. 
E) a regressive tax.

Question 17

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 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 is imposed. The government imposes a $10 per unit tax on sellers of MP3 players.
-Based on the figure above, after the tax is imposed, the price paid by the buyer is ________ per MP3 player.

Accepted Answer

A) $105 
B) $100 
C) $95 
D) $110 
E) $90 
A) $105 
B) $100 
C) $95 
D) $110 
E) $90

Question 19

For a given elasticity of demand, the less elastic the supply, the

Accepted Answer

A) larger the deadweight loss from a tax. 
B) larger the share of a tax paid by the sellers. 
C) greater the burden on the government from a tax. 
D) greater is the excess burden from a tax. 
E) larger the share of a tax paid by the buyers. 
A) larger the deadweight loss from a tax. 
B) larger the share of a tax paid by the sellers. 
C) greater the burden on the government from a tax. 
D) greater is the excess burden from a tax. 
E) larger the share of a tax paid by the buyers.

Question 20

A tax on the income from land or other resource with a perfectly inelastic supply

Accepted Answer

A) is efficient because it does not decrease the equilibrium quantity. 
B) has no deadweight loss. 
C) is paid entirely by the owner. 
D) Only answers A and B are correct. 
E) Answers A, B, and C are correct. 
A) is efficient because it does not decrease the equilibrium quantity. 
B) has no deadweight loss. 
C) is paid entirely by the owner. 
D) Only answers A and B are correct. 
E) Answers A, B, and C are correct.

Suppose the demand for barley is perfectly elastic.The supply curve of barley is upward sloping.If a tax is imposed on barley,

The deadweight loss of a tax on labor income is

Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic.If the federal government eliminated the 18.4 cents per gallon gasoline tax, the price paid by buyers would

Tax incidence is the

Sales taxes are usually collected from sellers, who view the tax as

-The above figure shows the market for capital.With the tax on capital income, the deadweight loss is equal to

The supply of oil is more elastic than the demand for oil.If oil is taxed $10 per barrel, how will the tax be divided between the buyer and seller?

-The above figure shows the labor market for land surveyors.The deadweight loss from the tax is equal to

A tax imposed on a resource's income is paid by both the resource's owners and the resource's employers, except for a tax

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

When a social security tax is imposed on workers, employment and when a social security tax is is imposed on employers, employment .

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

The percentage of an additional dollar of income that is paid in tax is the

The percentage of an additional dollar that is paid in tax is called

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

For a given elasticity of demand, the less elastic the supply, the

A tax on the income from land or other resource with a perfectly inelastic supply

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

Suppose the demand for barley is perfectly elastic.The supply curve of barley is upward sloping.If a tax is imposed on barley,

The deadweight loss of a tax on labor income is

Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic.If the federal government eliminated the 18.4 cents per gallon gasoline tax, the price paid by buyers would

Tax incidence is the

Sales taxes are usually collected from sellers, who view the tax as

-The above figure shows the market for capital.With the tax on capital income, the deadweight loss is equal to

The supply of oil is more elastic than the demand for oil.If oil is taxed $10 per barrel, how will the tax be divided between the buyer and seller?

-The above figure shows the labor market for land surveyors.The deadweight loss from the tax is equal to

A tax imposed on a resource's income is paid by both the resource's owners and the resource's employers, except for a tax

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

When a social security tax is imposed on workers, employment ________ and when a social security tax is is imposed on employers, employment ________.

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

The percentage of an additional dollar of income that is paid in tax is the

The percentage of an additional dollar that is paid in tax is called

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

For a given elasticity of demand, the less elastic the supply, the

A tax on the income from land or other resource with a perfectly inelastic supply

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

When a social security tax is imposed on workers, employment and when a social security tax is is imposed on employers, employment .