Question 1

If the government eliminates a tax on a good with a perfectly elastic supply, who benefits most?

Accepted Answer

A) buyers 
B) sellers 
C) buyers if the demand is also perfectly elastic, otherwise sellers 
D) buyers if the demand is unit elastic, otherwise sellers 
E) Buyers and sellers benefit equally. 
A) buyers 
B) sellers 
C) buyers if the demand is also perfectly elastic, otherwise sellers 
D) buyers if the demand is unit elastic, otherwise sellers 
E) Buyers and sellers benefit equally.

Question 2

In the Village of Punjab, Sheryl owns a well, which is the only source of drinking water.The supply of water is perfectly inelastic at a quantity of 1,000 gallons of water per day.At a price of $2.00 per gallon, the quantity demanded per day is 1,000 gallons.The government imposes a $0.50 per gallon tax.
a∙After the tax is imposed, what is the price paid by the villagers? What is the price received by Sheryl?
b∙How much revenue does the government collect?
c∙What fraction of the tax does Sheryl pay? What fraction is paid by the villagers?

Accepted Answer

a∙Because the supply is perfectly inelas

Question 3

The marriage tax problem in the United States is a

Accepted Answer

A) vertical equity problem because married people pay less than similar single people. 
B) horizontal equity problem because married people pay more than similar single people. 
C) benefits principle problem because who benefit more pay less. 
D) vertical equity problem because married people pay more than similar single people. 
E) horizontal equity problem because married people pay less than similar single people. 
A) vertical equity problem because married people pay less than similar single people. 
B) horizontal equity problem because married people pay more than similar single people. 
C) benefits principle problem because who benefit more pay less. 
D) vertical equity problem because married people pay more than similar single people. 
E) horizontal equity problem because married people pay less than similar single people.

Question 4

What are the similarities and differences between horizontal and vertical equity?

Accepted Answer

Both horizontal and vertical equity invo

Question 5

Which of the following taxes best illustrates the benefits principle of taxation?

Accepted Answer

A) sales tax on clothing used to fund food stamps 
B) state income tax used to fund state universities 
C) medicare tax imposed on all workers used to fund medical care for the elderly 
D) gasoline tax used to fund road repairs 
E) federal income tax used to fund NASA spending 
A) sales tax on clothing used to fund food stamps 
B) state income tax used to fund state universities 
C) medicare tax imposed on all workers used to fund medical care for the elderly 
D) gasoline tax used to fund road repairs 
E) federal income tax used to fund NASA spending

Question 6

The marriage tax problem in the U.S.tax code is a problem involving which of the following?

Accepted Answer

A) benefits received principle 
B) the ability-to-pay principle 
C) a conflict between horizontal and vertical equity 
D) vertical equity 
E) incidence of fairness principle 
A) benefits received principle 
B) the ability-to-pay principle 
C) a conflict between horizontal and vertical equity 
D) vertical equity 
E) incidence of fairness principle

Question 7

Because the supply of capital is highly elastic, taxing the income from capital results in
I∙firms that demand capital paying the greater share of the tax.
Ii∙a decrease in the equilibrium quantity of capital.
Iii∙a deadweight loss.

Accepted Answer

A) i only 
B) ii only 
C) i and iii 
D) ii and iii 
E) i, ii, and iii 
A) i only 
B) ii only 
C) i and iii 
D) ii and iii 
E) i, ii, and iii

Question 8

The excess burden of a tax refers to the fact that

Accepted Answer

A) the benefits from a tax exceed the tax revenue. 
B) the deadweight loss from a tax exceeds the remaining consumer surplus. 
C) marginal cost is greater than marginal benefit after the tax. 
D) a tax creates a deadweight loss. 
E) taxes are split between buyers and sellers. 
A) the benefits from a tax exceed the tax revenue. 
B) the deadweight loss from a tax exceeds the remaining consumer surplus. 
C) marginal cost is greater than marginal benefit after the tax. 
D) a tax creates a deadweight loss. 
E) taxes are split between buyers and sellers.

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, after the tax is imposed the consumer surplus

Accepted Answer

A) decreases by $17,500. 
B) increases by $17,500. 
C) decreases by $7,500. 
D) increases by $7,500. 
E) does not change. 
A) decreases by $17,500. 
B) increases by $17,500. 
C) decreases by $7,500. 
D) increases by $7,500. 
E) does not change.

Question 10

Explain under what conditions a sales tax on a specific good would be paid entirely by buyers.

Accepted Answer

Buyers pay all of a tax when t

Question 11

Based on the figure above, the burden of the tax

Accepted Answer

A) is split equally between the buyer and the seller. 
B) falls mostly on buyers. 
C) falls mostly on sellers. 
D) falls entirely on buyers. 
E) falls entirely on sellers. 
A) is split equally between the buyer and the seller. 
B) falls mostly on buyers. 
C) falls mostly on sellers. 
D) falls entirely on buyers. 
E) falls entirely on sellers.

Question 12

-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 employers?

Accepted Answer

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

Question 13

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.The total tax paid by Dave's employer is equal to

Accepted Answer

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

Question 14

Neither the supply of nor demand for a good is perfectly elastic or perfectly inelastic.So, imposing a tax on the good results in a ________ in the price received and kept by sellers and a ________ in the price paid by buyers.

Accepted Answer

A) rise; rise 
B) rise; fall 
C) fall; rise 
D) fall; fall 
E) no change; rise 
A) rise; rise 
B) rise; fall 
C) fall; rise 
D) fall; fall 
E) no change; rise

Question 15

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

Accepted Answer

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

Question 16

Suppose that, after government imposed an income tax on labor income, the wages paid by employers rose $1.00 and the wages received by employees fell by $0.20.What does that reveal about the elasticities of supply and demand?

Accepted Answer

A) Supply is more elastic than demand. 
B) Demand is more elastic than supply. 
C) Supply and demand are equally elastic. 
D) Both the supply and demand are inelastic. 
E) Nothing because more information is needed to learn about the elasticities. 
A) Supply is more elastic than demand. 
B) Demand is more elastic than supply. 
C) Supply and demand are equally elastic. 
D) Both the supply and demand are inelastic. 
E) Nothing because more information is needed to learn about the elasticities.

Question 17

-The demand for apple pies is perfectly elastic.If the government taxes apple pies at $1 a pie, then ________.

Accepted Answer

A) the seller pays the entire tax 
B) the buyer pays the entire tax 
C) the seller and the buyer split the tax evenly 
D) the seller and the buyer split the tax but the seller pays more 
E) who pays the tax depends on whether the government imposes the tax on pie buyers or on pie sellers 
A) the seller pays the entire tax 
B) the buyer pays the entire tax 
C) the seller and the buyer split the tax evenly 
D) the seller and the buyer split the tax but the seller pays more 
E) who pays the tax depends on whether the government imposes the tax on pie buyers or on pie sellers

Question 18

If the demand curve for a good is horizontal, a tax is levied on this product is

Accepted Answer

A) split between the buyers and the sellers but not evenly so that either the buyer or the seller pays more. 
B) split evenly between the buyers and the sellers. 
C) paid entirely by buyers. 
D) paid entirely by sellers. 
E) not paid by either the buyers or the sellers. 
A) split between the buyers and the sellers but not evenly so that either the buyer or the seller pays more. 
B) split evenly between the buyers and the sellers. 
C) paid entirely by buyers. 
D) paid entirely by sellers. 
E) not paid by either the buyers or the sellers.

Question 19

If a $10 sales tax is imposed on a good and the equilibrium price increases by $10, the tax is

Accepted Answer

A) split between buyers and sellers but not evenly. 
B) paid fully by sellers. 
C) paid fully by buyers. 
D) split evenly between buyers and sellers. 
E) perhaps split between buyers and sellers but it is impossible to determine the incidence without further information. 
A) split between buyers and sellers but not evenly. 
B) paid fully by sellers. 
C) paid fully by buyers. 
D) split evenly between buyers and sellers. 
E) perhaps split between buyers and sellers but it is impossible to determine the incidence without further information.

Question 20

Suppose everybody paid the same total amount of tax regardless of their income.This type of tax system would be

Accepted Answer

A) regressive. 
B) proportional. 
C) progressive. 
D) marginal. 
E) efficient. 
A) regressive. 
B) proportional. 
C) progressive. 
D) marginal. 
E) efficient.

If the government eliminates a tax on a good with a perfectly elastic supply, who benefits most?

The marriage tax problem in the United States is a

What are the similarities and differences between horizontal and vertical equity?

Which of the following taxes best illustrates the benefits principle of taxation?

The marriage tax problem in the U.S.tax code is a problem involving which of the following?

Because the supply of capital is highly elastic, taxing the income from capital results in I∙firms that demand capital paying the greater share of the tax. Ii∙a decrease in the equilibrium quantity of capital. Iii∙a deadweight loss.

The excess burden of a tax refers to the fact that

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 consumer surplus

Explain under what conditions a sales tax on a specific good would be paid entirely by buyers.

Based on the figure above, the burden of the tax

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.The total tax paid by Dave's employer is equal to

Neither the supply of nor demand for a good is perfectly elastic or perfectly inelastic.So, imposing a tax on the good results in a in the price received and kept by sellers and a in the price paid by buyers.

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

Suppose that, after government imposed an income tax on labor income, the wages paid by employers rose $1.00 and the wages received by employees fell by $0.20.What does that reveal about the elasticities of supply and demand?

-The demand for apple pies is perfectly elastic.If the government taxes apple pies at $1 a pie, then ________.

If the demand curve for a good is horizontal, a tax is levied on this product is

If a $10 sales tax is imposed on a good and the equilibrium price increases by $10, the tax is

Suppose everybody paid the same total amount of tax regardless of their income.This type of tax system would be

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

If the government eliminates a tax on a good with a perfectly elastic supply, who benefits most?

The marriage tax problem in the United States is a

What are the similarities and differences between horizontal and vertical equity?

Which of the following taxes best illustrates the benefits principle of taxation?

The marriage tax problem in the U.S.tax code is a problem involving which of the following?

Because the supply of capital is highly elastic, taxing the income from capital results in I∙firms that demand capital paying the greater share of the tax. Ii∙a decrease in the equilibrium quantity of capital. Iii∙a deadweight loss.

The excess burden of a tax refers to the fact that

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 consumer surplus

Explain under what conditions a sales tax on a specific good would be paid entirely by buyers.

Based on the figure above, the burden of the tax

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.The total tax paid by Dave's employer is equal to

Neither the supply of nor demand for a good is perfectly elastic or perfectly inelastic.So, imposing a tax on the good results in a ________ in the price received and kept by sellers and a ________ in the price paid by buyers.

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

Suppose that, after government imposed an income tax on labor income, the wages paid by employers rose $1.00 and the wages received by employees fell by $0.20.What does that reveal about the elasticities of supply and demand?

-The demand for apple pies is perfectly elastic.If the government taxes apple pies at $1 a pie, then ________.

If the demand curve for a good is horizontal, a tax is levied on this product is

If a $10 sales tax is imposed on a good and the equilibrium price increases by $10, the tax is

Suppose everybody paid the same total amount of tax regardless of their income.This type of tax system would be

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

Neither the supply of nor demand for a good is perfectly elastic or perfectly inelastic.So, imposing a tax on the good results in a in the price received and kept by sellers and a in the price paid by buyers.