Exam 12: The Design of the Tax System

Scenario 12-2 Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket.In addition,suppose the price of a movie ticket is $5. -Refer to Scenario 12-2.Suppose the government levies a tax of $1 on a movie ticket and that,as a result,the price of a movie ticket increases to $6.If Bob and Lisa both purchase a movie ticket,what is the deadweight loss from the tax?

Deadweight losses arise because a tax causes some individuals to change their behavior.

Table 12-5 -Refer to Table 12-5.What is the average tax rate for a person who makes $60,000?

Table 12-3 -Refer to Table 12-3.Assume that the price of a weekend ski pass is $38 and that the price reflects the actual unit cost of providing a weekend of skiing.Suppose the government imposes a tax of $15 on skiing,which raises the price of a weekend ski pass to $53.The deadweight loss associated with the tax is

Some states do not have a state income tax.

A budget surplus occurs when government receipts exceed government spending.

Of the following countries,which country's government collects the largest amount of tax revenue as a percentage of that country's total income?

Which of the following describes a situation where tax laws give preferential treatment to specific types of behavior?

A lump-sum tax

A person's tax liability refers to

If revenue from a gasoline tax is used to build and maintain public roads,the gasoline tax may be justified on the basis of

Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.

Scenario 12-1 Suppose Jim and Joan receive great satisfaction from their consumption of cheesecake.Joan would be willing to purchase only one slice and would pay up to $6 for it.Jim would be willing to pay $9 for his first slice,$7 for his second slice,and $3 for his third slice.The current market price is $3 per slice. -Refer to Scenario 12-1.How much consumer surplus does Joan receive from consuming her slice of cheesecake?

One advantage of a lump-sum tax over other taxes is that it

Pat calculates that for every extra dollar she earns,she owes the government 33 cents.Her total income now is $35,000,on which she pays taxes of $7,000.Determine her average tax rate and her marginal tax rate.

The concept that people should pay taxes based on the benefits they receive from government services is called

The concept of a "welfare program" is most closely associated with which particular federal government program?

If a poor family has three children in public school and a rich family has two children in private school,the benefits principle would suggest that

Use Table A to complete Table B.

If Mary earns $80,000 in taxable income and pays $40,000 in taxes,her marginal tax rate must be 50 percent.