Question 1

A tax on the wages that a firm pays its workers is called

Accepted Answer

A)  an income tax. 
B)  an excise tax. 
C)  a consumption tax. 
D)  a payroll tax. 
A)  an income tax. 
B)  an excise tax. 
C)  a consumption tax. 
D)  a payroll tax.

Question 2

Suppose that Deon places a $150 value on a new MP-3 player, and Juanita places a $140 value on it. The cost of the MP-3 player is $130. Suppose the government levies a $15 tax on MP-3 players, which raises the price to $145. What is the deadweight loss created by the tax?

Accepted Answer

Before the tax, the total surplus was $3

Question 3

Briefly describe why taxes create deadweight loss.

Accepted Answer

When the government imposes a

Question 4

Table 12-5
  
-Refer to Table 12-5. What is the average tax rate for a person who makes $120,000?

Accepted Answer

A)  25% 
B)  35% 
C)  45% 
D)  60% 
A)  25% 
B)  35% 
C)  45% 
D)  60%

Question 5

In 2009, the lowest quintile of income earners paid about

Accepted Answer

A)  1 percent of income as taxes and paid less than 1 percent of all taxes. 
B)  5 percent of income as taxes and paid less than 1 percent of all taxes. 
C)  1 percent of income as taxes and paid about 5 percent of all taxes. 
D)  5 percent of income as taxes and paid about 5 percent of all taxes. 
A)  1 percent of income as taxes and paid less than 1 percent of all taxes. 
B)  5 percent of income as taxes and paid less than 1 percent of all taxes. 
C)  1 percent of income as taxes and paid about 5 percent of all taxes. 
D)  5 percent of income as taxes and paid about 5 percent of all taxes.

Question 6

Which of the following countries has the largest tax burden?

Accepted Answer

A)  Mexico 
B)  Canada 
C)  United States 
D)  Denmark 
A)  Mexico 
B)  Canada 
C)  United States 
D)  Denmark

Question 7

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. Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $9. What is Regina's consumer surplus from cheesecake?

Accepted Answer

A)  zero 
B)  $2 
C)  $3 
D)  $6 
A)  zero 
B)  $2 
C)  $3 
D)  $6

Question 8

Table 12-16
  
-Refer to Table 12-16. The tax system is

Accepted Answer

A)  proportional. 
B)  regressive. 
C)  progressive. 
D)  lump sum. 
A)  proportional. 
B)  regressive. 
C)  progressive. 
D)  lump sum.

Question 9

Under a regressive tax system, the marginal tax rate for high income taxpayers is

Accepted Answer

A)  higher than the marginal tax rate for low income taxpayers. 
B)  the same as the marginal tax rate for low income taxpayers. 
C)  lower than the marginal tax rate for low income taxpayers. 
D)  Any of the above could be true under a regressive tax system. 
A)  higher than the marginal tax rate for low income taxpayers. 
B)  the same as the marginal tax rate for low income taxpayers. 
C)  lower than the marginal tax rate for low income taxpayers. 
D)  Any of the above could be true under a regressive tax system.

Question 10

In 2011, the U.S. federal government collected approximately how much in total tax receipts?

Accepted Answer

A)  $800 million 
B)  $2.5 billion 
C)  $5.2 billion 
D)  $8.7 billion 
A)  $800 million 
B)  $2.5 billion 
C)  $5.2 billion 
D)  $8.7 billion

Question 11

Suppose Tyler values a basketball at $20. Jacqui values a basketball at $16. The pre-tax price of a basketball $15.The government imposes a tax of $2 on each basketball, and the price rises to $17. The deadweight loss from the tax is

Accepted Answer

A)  $1. 
B)  $2. 
C)  $3. 
D)  $6. 
A)  $1. 
B)  $2. 
C)  $3. 
D)  $6.

Question 12

In the 1980s, President Ronald Reagan argued that high tax rates distorted economic incentives to work and save. In the 1990s, President Bill Clinton argued that the rich were not paying their fair share of taxes. Which of the following statements best summarizes the economic theories behind the differing philosophies?

Accepted Answer

A)  President Reagan was concerned about vertical equity, whereas President Clinton was concerned about horizontal equity. 
B)  President Reagan was concerned about average tax rates, whereas President Clinton was concerned about horizontal equity. 
C)  President Reagan was concerned about marginal tax rates, whereas President Clinton was concerned about vertical equity. 
D)  None of the above is correct. 
A)  President Reagan was concerned about vertical equity, whereas President Clinton was concerned about horizontal equity. 
B)  President Reagan was concerned about average tax rates, whereas President Clinton was concerned about horizontal equity. 
C)  President Reagan was concerned about marginal tax rates, whereas President Clinton was concerned about vertical equity. 
D)  None of the above is correct.

Question 13

Table 12-10
  
-Refer to Table 12-10. If Willie has $170,000 in taxable income, his marginal tax rate is

Accepted Answer

A)  25%. 
B)  28%. 
C)  33%. 
D)  35%. 
A)  25%. 
B)  28%. 
C)  33%. 
D)  35%.

Question 14

The government raises revenue through taxation to pay for the services it provides.

Accepted Answer

A) True 
 B)False

Question 15

What is the most efficient tax and why?

Accepted Answer

A lump-sum tax is the most eff

Question 16

A consumption tax is a tax on

Accepted Answer

A)  goods but not on services. 
B)  the amount of income that people spend. 
C)  the amount of income that people earn. 
D)  the amount of income that people save. 
A)  goods but not on services. 
B)  the amount of income that people spend. 
C)  the amount of income that people earn. 
D)  the amount of income that people save.

Question 17

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.
  
-Refer to Table 12-9. Ruby Sue is a single person whose taxable income is $100,000 a year. What happened to her marginal tax rate between 2012 and 2013?

Accepted Answer

A)  It increased. 
B)  It decreased. 
C)  It did not change. 
D)  We do not have enough information to answer this question. 
A)  It increased. 
B)  It decreased. 
C)  It did not change. 
D)  We do not have enough information to answer this question.

Question 18

The payroll tax differs from the individual income tax because the payroll tax is primarily earmarked to pay for

Accepted Answer

A)  employer-provided pensions. 
B)  Social Security and Medicare. 
C)  employer-provided health benefits. 
D)  job loss and training programs. 
A)  employer-provided pensions. 
B)  Social Security and Medicare. 
C)  employer-provided health benefits. 
D)  job loss and training programs.

Question 19

Table 12-25
  
-Refer to Table 12-25. Which plan represents the best tax?

Accepted Answer

The best tax depends on the criteria. Pl

Question 20

Define the marginal tax rate.

Accepted Answer

The marginal tax rat

A tax on the wages that a firm pays its workers is called

Suppose that Deon places a $150 value on a new MP-3 player, and Juanita places a $140 value on it. The cost of the MP-3 player is $130. Suppose the government levies a $15 tax on MP-3 players, which raises the price to $145. What is the deadweight loss created by the tax?

Briefly describe why taxes create deadweight loss.

Table 12-5 -Refer to Table 12-5. What is the average tax rate for a person who makes $120,000?

In 2009, the lowest quintile of income earners paid about

Which of the following countries has the largest tax burden?

Table 12-16 -Refer to Table 12-16. The tax system is

Under a regressive tax system, the marginal tax rate for high income taxpayers is

In 2011, the U.S. federal government collected approximately how much in total tax receipts?

Suppose Tyler values a basketball at $20. Jacqui values a basketball at $16. The pre-tax price of a basketball $15.The government imposes a tax of $2 on each basketball, and the price rises to $17. The deadweight loss from the tax is

Table 12-10 -Refer to Table 12-10. If Willie has $170,000 in taxable income, his marginal tax rate is

The government raises revenue through taxation to pay for the services it provides.

What is the most efficient tax and why?

A consumption tax is a tax on

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Ruby Sue is a single person whose taxable income is $100,000 a year. What happened to her marginal tax rate between 2012 and 2013?

The payroll tax differs from the individual income tax because the payroll tax is primarily earmarked to pay for

Table 12-25 -Refer to Table 12-25. Which plan represents the best tax?

Define the marginal tax rate.

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

Exam 12: The Design of the Tax System

A tax on the wages that a firm pays its workers is called

Suppose that Deon places a $150 value on a new MP-3 player, and Juanita places a $140 value on it. The cost of the MP-3 player is $130. Suppose the government levies a $15 tax on MP-3 players, which raises the price to $145. What is the deadweight loss created by the tax?

Briefly describe why taxes create deadweight loss.

Table 12-5 -Refer to Table 12-5. What is the average tax rate for a person who makes $120,000?

In 2009, the lowest quintile of income earners paid about

Which of the following countries has the largest tax burden?

Table 12-16 -Refer to Table 12-16. The tax system is

Under a regressive tax system, the marginal tax rate for high income taxpayers is

In 2011, the U.S. federal government collected approximately how much in total tax receipts?

Suppose Tyler values a basketball at $20. Jacqui values a basketball at $16. The pre-tax price of a basketball $15.The government imposes a tax of $2 on each basketball, and the price rises to $17. The deadweight loss from the tax is

Table 12-10 -Refer to Table 12-10. If Willie has $170,000 in taxable income, his marginal tax rate is

The government raises revenue through taxation to pay for the services it provides.

What is the most efficient tax and why?

A consumption tax is a tax on

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Ruby Sue is a single person whose taxable income is $100,000 a year. What happened to her marginal tax rate between 2012 and 2013?

The payroll tax differs from the individual income tax because the payroll tax is primarily earmarked to pay for

Table 12-25 -Refer to Table 12-25. Which plan represents the best tax?

Define the marginal tax rate.

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