Exam 8: Taxes

Which of the following is true? I∙If supply is perfectly inelastic, the tax creates no deadweight loss. Ii∙The elasticities of supply and demand, not Congress, determine who pays the income tax. Iii∙A tax is progressive if the average tax rate falls with income.

-The figure above shows the market for tires.According to the figure, the government collects ________ per month in total tax revenue

What are the two conflicting principles of fairness that apply to a tax system? Briefly explain each.

The demand for gasoline is inelastic and the supply of gasoline is elastic.Therefore,

Consider a social security tax on workers versus a social security tax on employers.In comparing the outcomes of each type of tax, we see that

In 2010, Social Security taxes of over 11 percent were imposed on all income up to $104,000.For income that exceeded $104,000, no Social Security tax was imposed.Hence the Social Security tax is a

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of ________ per tire.

The incidence of a tax refers to

-The graph shows the market for textbooks.If the government introduces a tax of $20 a textbook, then the price paid by buyers ________.

-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 largest amount of deadweight loss?

If the average tax rate is constant as income increases, then the tax is called

Trying to achieve vertical equity by using a progressive income tax structure can create problems with which of the following?

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 received (and kept)by the seller is ________ per MP3 player.

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

To determine who bears the greater share of a tax, we compare 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 is imposed. The government imposes a $10 per unit tax on sellers of MP3 players. -Based on the figure above, the burden of the tax

For 2011, the federal government reduced the Social Security tax on workers by 2 percentage points.This will likely cause

A tax

When a tax is imposed on a good or service, the

-The above figure shows the market for capital.Without a tax on capital income, the interest rate is ________ and firms use ________ million of capital.