Question 1

The benefits principle of fair taxation

Accepted Answer

A) can be used to justify the progressive income tax. 
B) can be used to justify high fuel taxes to pay for public schools. 
C) is the proposition that people should pay taxes equal to the benefits they receive. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct. 
A) can be used to justify the progressive income tax. 
B) can be used to justify high fuel taxes to pay for public schools. 
C) is the proposition that people should pay taxes equal to the benefits they receive. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct.

Question 2

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 3

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 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 4

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.If there was no income tax, Dave would work ________ hours per year and the wage rate would be ________ per hour.

Accepted Answer

A) 2000; $28 
B) 1500; $28 
C) 1500; $27 
D) 2000; $30 
E) 1500; $30 
A) 2000; $28 
B) 1500; $28 
C) 1500; $27 
D) 2000; $30 
E) 1500; $30

Question 5

If the elasticity of demand for a product equals 3 and the supply is perfectly elastic, then if a tax is imposed on this product,

Accepted Answer

A) the buyer pays all the tax. 
B) the seller pays all the tax. 
C) the buyer pays 3/4 of the tax. 
D) the seller pays 3/4 of the tax. 
E) the buyer pays 4/3 of the tax. 
A) the buyer pays all the tax. 
B) the seller pays all the tax. 
C) the buyer pays 3/4 of the tax. 
D) the seller pays 3/4 of the tax. 
E) the buyer pays 4/3 of the tax.

Question 6

The benefits principle of tax fairness argues that

Accepted Answer

A) everyone receives equal benefits from public services so taxes should be the same for all. 
B) highly paid people should pay lower taxes because they work harder. 
C) taxes should be related to the amount of income earned. 
D) people should pay taxes equal to the benefits from public services received. 
E) the benefits people get from the government should not be related to their taxes. 
A) everyone receives equal benefits from public services so taxes should be the same for all. 
B) highly paid people should pay lower taxes because they work harder. 
C) taxes should be related to the amount of income earned. 
D) people should pay taxes equal to the benefits from public services received. 
E) the benefits people get from the government should not be related to their taxes.

Question 7

Using fuel taxes to pay for maintaining public highways is an example of

Accepted Answer

A) the benefits principle of fair taxation. 
B) horizontal equity approach to taxation. 
C) vertical equity approach to taxation. 
D) the ability-to-pay principle of taxation. 
E) the excess burden from taxes. 
A) the benefits principle of fair taxation. 
B) horizontal equity approach to taxation. 
C) vertical equity approach to taxation. 
D) the ability-to-pay principle of taxation. 
E) the excess burden from taxes.

Question 8

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.
-In the figure above, at the market equilibrium with the tax, marginal benefit ________ marginal cost, and the quantity of MP3 players sold is ________.

Accepted Answer

A) exceeds; inefficient 
B) is below; inefficient 
C) is below; efficient 
D) exceeds; efficient 
E) equals; efficient 
A) exceeds; inefficient 
B) is below; inefficient 
C) is below; efficient 
D) exceeds; efficient 
E) equals; efficient

Question 9

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 deadweight loss from the tax is

Accepted Answer

A) $15,000 per week. 
B) $20,000 per week. 
C) $35,000 per week. 
D) $17,500 per week. 
E) zero. 
A) $15,000 per week. 
B) $20,000 per week. 
C) $35,000 per week. 
D) $17,500 per week. 
E) zero.

Question 10

Why are sales taxes, which require that everyone pay the same percentage tax, considered regressive taxes?

Accepted Answer

Suppose a city implements a 6 percent ta

Question 11

The proposition that taxpayers with the same ability to pay should pay the same taxes is called

Accepted Answer

A) the benefits principle. 
B) the ability-to-pay imperative. 
C) vertical equity. 
D) horizontal equity. 
E) the fair-tax incidence principle. 
A) the benefits principle. 
B) the ability-to-pay imperative. 
C) vertical equity. 
D) horizontal equity. 
E) the fair-tax incidence principle.

Question 12

Suppose the government imposes a $1 per gallon per gallon tax on sellers of gasoline.As a result, the

Accepted Answer

A) supply curve shifts leftward. 
B) supply curve shifts rightward. 
C) demand curve shifts leftward. 
D) demand curve shifts rightward. 
E) demand and supply curves both shift leftward. 
A) supply curve shifts leftward. 
B) supply curve shifts rightward. 
C) demand curve shifts leftward. 
D) demand curve shifts rightward. 
E) demand and supply curves both shift leftward.

Question 13

If the average tax rate remains constant as income changes, the tax is

Accepted Answer

A) progressive. 
B) proportional. 
C) regressive. 
D) definitely fair. 
E) impossible to determine with the information given. 
A) progressive. 
B) proportional. 
C) regressive. 
D) definitely fair. 
E) impossible to determine with the information given.

Question 14

If we look at the percentage of total tax revenue collected by different taxes in the United States, we see that

Accepted Answer

A) personal income taxes are the largest. 
B) Social Security taxes are the largest. 
C) excise taxes, while not the largest, are second only to Social Security taxes. 
D) sales taxes are the smallest. 
E) corporate income taxes are by far the largest. 
A) personal income taxes are the largest. 
B) Social Security taxes are the largest. 
C) excise taxes, while not the largest, are second only to Social Security taxes. 
D) sales taxes are the smallest. 
E) corporate income taxes are by far the largest.

Question 15

To calculate the revenue government receives when a tax is imposed on a good, multiply the

Accepted Answer

A) pre-tax equilibrium price by the pre-tax quantity. 
B) after-tax equilibrium price by the after-tax quantity. 
C) tax by the pre-tax quantity. 
D) tax by the after-tax quantity. 
E) after-tax equilibrium price by the after-tax quantity and then subtract the pre-tax equilibrium price multiplied by the pre-tax quantity. 
A) pre-tax equilibrium price by the pre-tax quantity. 
B) after-tax equilibrium price by the after-tax quantity. 
C) tax by the pre-tax quantity. 
D) tax by the after-tax quantity. 
E) after-tax equilibrium price by the after-tax quantity and then subtract the pre-tax equilibrium price multiplied by the pre-tax quantity.

Question 16

-The figure above shows a labor market in which an income tax has been imposed.
a∙How many hours of labor were employed before the tax was imposed?
b∙How many hours of labor are employed after the tax?
c∙What was the wage rate employers paid and that workers received before the tax?
d∙What is the wage rate employers pay and that workers receive after the tax?
e∙What accounts for the difference between what employers pay and what workers receive?

Accepted Answer

a∙40 hours of labor were employed before

Question 17

Suppose the demand for specialty car license plates is perfectly inelastic and the supply curve for specialty license plates is upward sloping.A tax is imposed on specialty license plates.Which of the following is true?

Accepted Answer

A) Drivers pay the smallest share of the tax. 
B) Drivers pay none of the tax. 
C) Drivers pay all of the tax. 
D) The government pays all of the tax. 
E) The government collects nothing in tax revenues. 
A) Drivers pay the smallest share of the tax. 
B) Drivers pay none of the tax. 
C) Drivers pay all of the tax. 
D) The government pays all of the tax. 
E) The government collects nothing in tax revenues.

Question 18

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 19

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.With the income tax, Dave works ________ hours per year and his after-tax wage rate is ________ per hour.

Accepted Answer

A) 2000; $28 
B) 1500; $28 
C) 2000; $30 
D) 1500; $30 
E) 1500; $27 
A) 2000; $28 
B) 1500; $28 
C) 2000; $30 
D) 1500; $30 
E) 1500; $27

Question 20

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.

The benefits principle of fair taxation

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

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

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.If there was no income tax, Dave would work hours per year and the wage rate would be per hour.

If the elasticity of demand for a product equals 3 and the supply is perfectly elastic, then if a tax is imposed on this product,

The benefits principle of tax fairness argues that

Using fuel taxes to pay for maintaining public highways is an example of

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 deadweight loss from the tax is

Why are sales taxes, which require that everyone pay the same percentage tax, considered regressive taxes?

The proposition that taxpayers with the same ability to pay should pay the same taxes is called

Suppose the government imposes a $1 per gallon per gallon tax on sellers of gasoline.As a result, the

If the average tax rate remains constant as income changes, the tax is

If we look at the percentage of total tax revenue collected by different taxes in the United States, we see that

To calculate the revenue government receives when a tax is imposed on a good, multiply the

Suppose the demand for specialty car license plates is perfectly inelastic and the supply curve for specialty license plates is upward sloping.A tax is imposed on specialty license plates.Which of the following is true?

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

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.With the income tax, Dave works hours per year and his after-tax wage rate is per hour.

The deadweight loss from a tax is called the

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 benefits principle of fair taxation

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

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.If there was no income tax, Dave would work ________ hours per year and the wage rate would be ________ per hour.

If the elasticity of demand for a product equals 3 and the supply is perfectly elastic, then if a tax is imposed on this product,

The benefits principle of tax fairness argues that

Using fuel taxes to pay for maintaining public highways is an example of

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 deadweight loss from the tax is

Why are sales taxes, which require that everyone pay the same percentage tax, considered regressive taxes?

The proposition that taxpayers with the same ability to pay should pay the same taxes is called

Suppose the government imposes a $1 per gallon per gallon tax on sellers of gasoline.As a result, the

If the average tax rate remains constant as income changes, the tax is

If we look at the percentage of total tax revenue collected by different taxes in the United States, we see that

To calculate the revenue government receives when a tax is imposed on a good, multiply the

Suppose the demand for specialty car license plates is perfectly inelastic and the supply curve for specialty license plates is upward sloping.A tax is imposed on specialty license plates.Which of the following is true?

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

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.With the income tax, Dave works ________ hours per year and his after-tax wage rate is ________ per hour.

The deadweight loss from a tax is called the

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 above figure shows the labor market for land surveyors.Dave is a land surveyor.If there was no income tax, Dave would work hours per year and the wage rate would be per hour.

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.With the income tax, Dave works hours per year and his after-tax wage rate is per hour.