Question 1

What is the difference in the tax incidence between imposing the Social Security tax on workers and imposing the same tax on employers?

Accepted Answer

There is no difference; the ta

Question 2

The deadweight loss from a tax

Accepted Answer

A) is the tax revenue the government collects when people die. 
B) is the split of a tax between the amount paid and the amount collected. 
C) equals the amount collected as revenue from the tax. 
D) is called the excess burden of the tax. 
E) equals the amount collected as revenue from the tax plus the excess burden of the tax. 
A) is the tax revenue the government collects when people die. 
B) is the split of a tax between the amount paid and the amount collected. 
C) equals the amount collected as revenue from the tax. 
D) is called the excess burden of the tax. 
E) equals the amount collected as revenue from the tax plus the excess burden of the tax.

Question 3

If the supply of capital is perfectly ________ end up paying the tax on capital income.

Accepted Answer

A) elastic, lenders 
B) elastic, firms that demand capital 
C) inelastic, lenders 
D) inelastic, firms that demand capital 
E) unit elastic, firms that demand capital 
A) elastic, lenders 
B) elastic, firms that demand capital 
C) inelastic, lenders 
D) inelastic, firms that demand capital 
E) unit elastic, firms that demand capital

Question 4

-The figure above shows the market for gasoline.The government has imposed a tax on gasoline.
a∙What is the amount of the tax per gallon of gasoline?
b∙How much tax revenue will government collect from this tax?
c∙How much of the tax is paid by buyers? How much is paid by sellers? Which is more elastic, the supply or demand for gasoline?

Accepted Answer

a∙The tax is $1.50 per gallon, the amoun

Question 5

The marginal tax rate is the

Accepted Answer

A) average amount paid as taxes. 
B) percentage of total income that is paid in tax. 
C) percentage of an additional dollar of income paid in tax. 
D) total amount of tax paid as a percentage of total income earned. 
E) same as the average tax rate for a progressive tax. 
A) average amount paid as taxes. 
B) percentage of total income that is paid in tax. 
C) percentage of an additional dollar of income paid in tax. 
D) total amount of tax paid as a percentage of total income earned. 
E) same as the average tax rate for a progressive tax.

Question 6

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

Accepted Answer

A) Roads and highways are built and maintained through a tax on gasoline. 
B) The local library is funded through property taxes levied on all homeowners. 
C) The WIC program provides food to low income mothers and is funded through the federal income tax. 
D) A sales tax on food pays for local police and fire protection. 
E) City parks are maintained through local excise taxes. 
A) Roads and highways are built and maintained through a tax on gasoline. 
B) The local library is funded through property taxes levied on all homeowners. 
C) The WIC program provides food to low income mothers and is funded through the federal income tax. 
D) A sales tax on food pays for local police and fire protection. 
E) City parks are maintained through local excise taxes.

Question 7

Suppose the supply of labor is more inelastic than the demand for labor.Then, a social security tax imposed on employers

Accepted Answer

A) shifts the demand curve for labor leftward. 
B) lowers the wage rate received by workers. 
C) leads to the workers paying more of the tax than the employers. 
D) Only answers B and C are correct. 
E) Answers A, B, and C are correct. 
A) shifts the demand curve for labor leftward. 
B) lowers the wage rate received by workers. 
C) leads to the workers paying more of the tax than the employers. 
D) Only answers B and C are correct. 
E) Answers A, B, and C are correct.

Question 8

The demand curve for pizza is downward sloping and the supply curve is upward sloping.If the government imposes a $2 tax on a pizza, ________ the tax.

Accepted Answer

A) only consumers pay 
B) only producers pay 
C) both producers and consumers pay part of 
D) neither producers nor consumers pay part of 
E) the government pays 
A) only consumers pay 
B) only producers pay 
C) both producers and consumers pay part of 
D) neither producers nor consumers pay part of 
E) the government pays

Question 9

The proposition that people should pay taxes according to how easily they can bear the burden is known as the ________ principle.

Accepted Answer

A) regressive tax 
B) benefits 
C) ability-to-pay 
D) fairness 
E) incidence of fairness 
A) regressive tax 
B) benefits 
C) ability-to-pay 
D) fairness 
E) incidence of fairness

Question 10

Consider the two principles of fair taxation, the benefits principle and the ability-to-pay principle,

Accepted Answer

A) Both state that people should pay taxes according to the benefits they receive from public services. 
B) Both state that people should pay taxes according to how easily they can bear the burden. 
C) Both are based on horizontal equity. 
D) Both present conflicting ideas on the fairness of taxes. 
E) Both are based on vertical equity. 
A) Both state that people should pay taxes according to the benefits they receive from public services. 
B) Both state that people should pay taxes according to how easily they can bear the burden. 
C) Both are based on horizontal equity. 
D) Both present conflicting ideas on the fairness of taxes. 
E) Both are based on vertical equity.

Question 11

When a tax is imposed on a good or a service, the marginal benefit of the last unit bought ________ the marginal cost of the last unit.

Accepted Answer

A) is equal to 
B) is greater than 
C) is less than 
D) None of the above answers is correct because there is no consistent relationship between the marginal benefit of the last unit and its marginal cost. 
E) is not able to be compared to 
A) is equal to 
B) is greater than 
C) is less than 
D) None of the above answers is correct because there is no consistent relationship between the marginal benefit of the last unit and its marginal cost. 
E) is not able to be compared to

Question 12

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 paid by buyers and ________ in the equilibrium quantity.

Accepted Answer

A) rise; an increase 
B) rise; a decrease 
C) fall; an increase 
D) fall; a decrease 
E) a rise; no change 
A) rise; an increase 
B) rise; a decrease 
C) fall; an increase 
D) fall; a decrease 
E) a rise; no change

Question 13

Which of the following taxes guarantees vertical equity?
i. income tax
ii. social security tax on workers
iii. social security tax on employers

Accepted Answer

A) i only 
B) i and ii 
C) ii and iii 
D) iii only 
E) None of the above taxes guarantees vertical equity. 
A) i only 
B) i and ii 
C) ii and iii 
D) iii only 
E) None of the above taxes guarantees vertical equity.

Question 14

-The figure above shows the market for a life-saving drug.Suppose the government imposes a $150 tax per dose on the drug.Show and describe the impact on the market.Who pays this tax?

Accepted Answer

@#IMG-DLM& The tax decreases the supply and shifts

Question 15

-The figure above shows the impact of an income tax.The revenue collected by the government equals area

Accepted Answer

A) bce. 
B) feba. 
C) fed. 
D) acf. 
E) None of the above answers is correct. 
A) bce. 
B) feba. 
C) fed. 
D) acf. 
E) None of the above answers is correct.

Question 16

When each taxpayer pays the same average tax rate regardless of the taxpayer's income, the tax is

Accepted Answer

A) a regressive tax. 
B) a progressive tax. 
C) an estate tax. 
D) a proportional tax. 
E) an efficient-price tax. 
A) a regressive tax. 
B) a progressive tax. 
C) an estate tax. 
D) a proportional tax. 
E) an efficient-price tax.

Question 17

Which of the following is correct?

Accepted Answer

A) If your income is $20,000 and you are paying $2,000 in taxes, your marginal tax rate is 10 percent. 
B) If your income is $20,000 and you are paying $2,000 in income taxes, the income tax you are paying is progressive. 
C) If you paid $0.39 as tax from an additional dollar you earned, your marginal tax rate is 39 percent. 
D) If your marginal tax rate falls as your income increases, the tax is progressive. 
E) If your income is $20,000 and you are paying $2,000 in income taxes, the income tax you are paying is proportional. 
A) If your income is $20,000 and you are paying $2,000 in taxes, your marginal tax rate is 10 percent. 
B) If your income is $20,000 and you are paying $2,000 in income taxes, the income tax you are paying is progressive. 
C) If you paid $0.39 as tax from an additional dollar you earned, your marginal tax rate is 39 percent. 
D) If your marginal tax rate falls as your income increases, the tax is progressive. 
E) If your income is $20,000 and you are paying $2,000 in income taxes, the income tax you are paying is proportional.

Question 18

If the average tax rate ________ as income increases, then the tax is a ________ tax.

Accepted Answer

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

Question 19

-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 amount of this tax is ________ per bucket of golf balls.

Accepted Answer

A) $4 
B) $2 
C) $2.50 
D) $1 
E) $3 
A) $4 
B) $2 
C) $2.50 
D) $1 
E) $3

Question 20

A tax on labor income ________ a deadweight loss for low-wage workers and ________ a deadweight loss for high-wage workers.

Accepted Answer

A) creates; creates 
B) creates; does not create 
C) does not create; creates 
D) does not create; does not creates 
E) eliminates; eliminates 
A) creates; creates 
B) creates; does not create 
C) does not create; creates 
D) does not create; does not creates 
E) eliminates; eliminates

What is the difference in the tax incidence between imposing the Social Security tax on workers and imposing the same tax on employers?

The deadweight loss from a tax

If the supply of capital is perfectly ________ end up paying the tax on capital income.

The marginal tax rate is the

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

Suppose the supply of labor is more inelastic than the demand for labor.Then, a social security tax imposed on employers

The demand curve for pizza is downward sloping and the supply curve is upward sloping.If the government imposes a $2 tax on a pizza, ________ the tax.

The proposition that people should pay taxes according to how easily they can bear the burden is known as the ________ principle.

Consider the two principles of fair taxation, the benefits principle and the ability-to-pay principle,

When a tax is imposed on a good or a service, the marginal benefit of the last unit bought ________ the marginal cost of the last unit.

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 paid by buyers and in the equilibrium quantity.

Which of the following taxes guarantees vertical equity? i. income tax ii. social security tax on workers iii. social security tax on employers

-The figure above shows the market for a life-saving drug.Suppose the government imposes a $150 tax per dose on the drug.Show and describe the impact on the market.Who pays this tax?

-The figure above shows the impact of an income tax.The revenue collected by the government equals area

When each taxpayer pays the same average tax rate regardless of the taxpayer's income, the tax is

Which of the following is correct?

If the average tax rate as income increases, then the tax is a tax.

-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 amount of this tax is ________ per bucket of golf balls.

A tax on labor income a deadweight loss for low-wage workers and a deadweight loss for high-wage workers.

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

What is the difference in the tax incidence between imposing the Social Security tax on workers and imposing the same tax on employers?

The deadweight loss from a tax

If the supply of capital is perfectly ________ end up paying the tax on capital income.

The marginal tax rate is the

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

Suppose the supply of labor is more inelastic than the demand for labor.Then, a social security tax imposed on employers

The demand curve for pizza is downward sloping and the supply curve is upward sloping.If the government imposes a $2 tax on a pizza, ________ the tax.

The proposition that people should pay taxes according to how easily they can bear the burden is known as the ________ principle.

Consider the two principles of fair taxation, the benefits principle and the ability-to-pay principle,

When a tax is imposed on a good or a service, the marginal benefit of the last unit bought ________ the marginal cost of the last unit.

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 paid by buyers and ________ in the equilibrium quantity.

Which of the following taxes guarantees vertical equity? i. income tax ii. social security tax on workers iii. social security tax on employers

-The figure above shows the market for a life-saving drug.Suppose the government imposes a $150 tax per dose on the drug.Show and describe the impact on the market.Who pays this tax?

-The figure above shows the impact of an income tax.The revenue collected by the government equals area

When each taxpayer pays the same average tax rate regardless of the taxpayer's income, the tax is

Which of the following is correct?

If the average tax rate ________ as income increases, then the tax is a ________ tax.

-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 amount of this tax is ________ per bucket of golf balls.

A tax on labor income ________ a deadweight loss for low-wage workers and ________ a deadweight loss for high-wage workers.

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 paid by buyers and in the equilibrium quantity.

If the average tax rate as income increases, then the tax is a tax.

A tax on labor income a deadweight loss for low-wage workers and a deadweight loss for high-wage workers.