Question 1

When the marginal tax rate exceeds the average tax rate, the tax is

Accepted Answer

A)  proportional. 
B)  regressive. 
C)  non-egalitarian. 
D)  progressive. 
A)  proportional. 
B)  regressive. 
C)  non-egalitarian. 
D)  progressive.

Question 2

Table 12-1
  
-Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. What is the value of the surplus that accrues to all four skiers from their weekend trip?

Accepted Answer

A)  $75 
B)  $105 
C)  $185 
D)  $215 
A)  $75 
B)  $105 
C)  $185 
D)  $215

Question 3

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

Accepted Answer

A) True 
 B)False

Question 4

The share of federal government spending on healthcare has risen substantially over time. This is most likely a result of

Accepted Answer

A)  medical advances that provide new, better, but often more expensive medical treatments. 
B)  a rising population of the elderly in the economy. 
C)  health insurance reform that will include government subsidies for health insurance for many low-to- moderate income families. 
D)  All of the above are important factors. 
A)  medical advances that provide new, better, but often more expensive medical treatments. 
B)  a rising population of the elderly in the economy. 
C)  health insurance reform that will include government subsidies for health insurance for many low-to- moderate income families. 
D)  All of the above are important factors.

Question 5

Table 12-10
  
-Refer to Table 12-10. If Miss Kay has $80,000 in taxable income, her average tax rate is

Accepted Answer

A)  18.5%. 
B)  20.2%. 
C)  21.8%. 
D)  25.0%. 
A)  18.5%. 
B)  20.2%. 
C)  21.8%. 
D)  25.0%.

Question 6

Income taxes and property taxes generate the highest tax revenue for state and local governments.

Accepted Answer

A) True 
 B)False

Question 7

State and local governments receive the largest portion of their tax revenues from

Accepted Answer

A)  sales taxes and income taxes. 
B)  income taxes and property taxes. 
C)  payroll taxes and income taxes. 
D)  property taxes and sales taxes. 
A)  sales taxes and income taxes. 
B)  income taxes and property taxes. 
C)  payroll taxes and income taxes. 
D)  property taxes and sales taxes.

Question 8

Vertical equity and horizontal equity are associated with

Accepted Answer

A)  the benefits principle of taxation. 
B)  the ability-to-pay principle of taxation. 
C)  taxes that have no deadweight losses. 
D)  falling marginal tax rates. 
A)  the benefits principle of taxation. 
B)  the ability-to-pay principle of taxation. 
C)  taxes that have no deadweight losses. 
D)  falling marginal tax rates.

Question 9

In 2009, the top 1 percent of income earners

Accepted Answer

A)  made about 13 percent of all income. 
B)  paid about 22 percent of all taxes. 
C)  made over 2.5 times the percentage of all income earned by the lowest quintile. 
D)  All of the above are correct. 
A)  made about 13 percent of all income. 
B)  paid about 22 percent of all taxes. 
C)  made over 2.5 times the percentage of all income earned by the lowest quintile. 
D)  All of the above are correct.

Question 10

In 2011, what percentage of federal government receipts came from corporate income taxes?

Accepted Answer

A)  7% 
B)  12% 
C)  25% 
D)  43% 
A)  7% 
B)  12% 
C)  25% 
D)  43%

Question 11

Scenario 12-3
Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $8 for it. Roger would be willing to pay $11 for his first slice,$9 for his second slice, and $5 for his third slice. The current market price is $5 per slice.
-Refer to Scenario 12-3. How much consumer surplus does Regina receive from consuming her slice of cheesecake?

Accepted Answer

A)  $3 
B)  $5 
C)  $9 d 
D)  . $12 
A)  $3 
B)  $5 
C)  $9 d 
D)  . $12

Question 12

Resources devoted to complying with the tax laws are a type of deadweight loss.

Accepted Answer

A) True 
 B)False

Question 13

A person's marginal tax rate equals

Accepted Answer

A)  her tax obligation divided by her average tax rate. 
B)  the increase in taxes she would pay as a percentage of the rise in her income. 
C)  her tax obligation divided by her income. 
D)  the increase in taxes if her average tax rate were to rise by 1percent. 
A)  her tax obligation divided by her average tax rate. 
B)  the increase in taxes she would pay as a percentage of the rise in her income. 
C)  her tax obligation divided by her income. 
D)  the increase in taxes if her average tax rate were to rise by 1percent.

Question 14

Corporate income taxes are based on the amount of revenue a corporation earns.

Accepted Answer

A) True 
 B)False

Question 15

Suppose the government taxes 10 percent of the first $30,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $50,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Accepted Answer

The marginal tax rate would be 30 percen

Question 16

Table 12-6
The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income.
  
-Refer to Table 12-6. For this tax schedule, what is the average tax rate for an individual with $280,000 in taxable income?

Accepted Answer

A)  39.9% 
B)  40.2% 
C)  42.7% 
D)  44.8% 
A)  39.9% 
B)  40.2% 
C)  42.7% 
D)  44.8%

Question 17

For state and local governments, in 2011, education accounted for approximately what percentage of spending?

Accepted Answer

A)  25 percent 
B)  34 percent 
C)  50 percent 
D)  75 percent 
A)  25 percent 
B)  34 percent 
C)  50 percent 
D)  75 percent

Question 18

Suppose a recent increase in federal gasoline taxes is estimated to cause a $150 million reduction in the total surplus (consumer plus producer surplus) in the gasoline market. If tax revenues increased by $100 million, what is the deadweight loss associated with the tax? As a result of the tax, 10,000 people sold their cars and started riding their bicycles to work. How much of the burden of the deadweight loss is incurred by the bicycle riders?

Accepted Answer

The direct deadweight loss is $50 millio

Question 19

Tax evasion is

Accepted Answer

A)  facilitated by legal deductions to taxable income. 
B)  the same as tax avoidance. 
C)  recommended by the American Accounting Association. 
D)  illegal. 
A)  facilitated by legal deductions to taxable income. 
B)  the same as tax avoidance. 
C)  recommended by the American Accounting Association. 
D)  illegal.

Question 20

The benefits principle of taxation can be used to argue that wealthy citizens should pay higher taxes than poorer ones on the basis that

Accepted Answer

A)  police services are more frequently used in poor neighborhoods. 
B)  the wealthy benefit more from services provided by government than the poor. 
C)  the poor are more active in political processes. 
D)  the poor receive welfare payments. 
A)  police services are more frequently used in poor neighborhoods. 
B)  the wealthy benefit more from services provided by government than the poor. 
C)  the poor are more active in political processes. 
D)  the poor receive welfare payments.

When the marginal tax rate exceeds the average tax rate, the tax is

Table 12-1 -Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. What is the value of the surplus that accrues to all four skiers from their weekend trip?

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

The share of federal government spending on healthcare has risen substantially over time. This is most likely a result of

Table 12-10 -Refer to Table 12-10. If Miss Kay has $80,000 in taxable income, her average tax rate is

Income taxes and property taxes generate the highest tax revenue for state and local governments.

State and local governments receive the largest portion of their tax revenues from

Vertical equity and horizontal equity are associated with

In 2009, the top 1 percent of income earners

In 2011, what percentage of federal government receipts came from corporate income taxes?

Resources devoted to complying with the tax laws are a type of deadweight loss.

A person's marginal tax rate equals

Corporate income taxes are based on the amount of revenue a corporation earns.

Suppose the government taxes 10 percent of the first $30,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $50,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Table 12-6 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-6. For this tax schedule, what is the average tax rate for an individual with $280,000 in taxable income?

For state and local governments, in 2011, education accounted for approximately what percentage of spending?

Tax evasion is

The benefits principle of taxation can be used to argue that wealthy citizens should pay higher taxes than poorer ones on the basis that

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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Exam 12: The Design of the Tax System

When the marginal tax rate exceeds the average tax rate, the tax is

Table 12-1 -Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. What is the value of the surplus that accrues to all four skiers from their weekend trip?

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

The share of federal government spending on healthcare has risen substantially over time. This is most likely a result of

Table 12-10 -Refer to Table 12-10. If Miss Kay has $80,000 in taxable income, her average tax rate is

Income taxes and property taxes generate the highest tax revenue for state and local governments.

State and local governments receive the largest portion of their tax revenues from

Vertical equity and horizontal equity are associated with

In 2009, the top 1 percent of income earners

In 2011, what percentage of federal government receipts came from corporate income taxes?

Resources devoted to complying with the tax laws are a type of deadweight loss.

A person's marginal tax rate equals

Corporate income taxes are based on the amount of revenue a corporation earns.

Suppose the government taxes 10 percent of the first $30,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $50,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Table 12-6 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-6. For this tax schedule, what is the average tax rate for an individual with $280,000 in taxable income?

For state and local governments, in 2011, education accounted for approximately what percentage of spending?

Tax evasion is

The benefits principle of taxation can be used to argue that wealthy citizens should pay higher taxes than poorer ones on the basis that

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters