Question 1

A tax that causes the price that producers receive for a commodity to deviate from the buyer's price is

Accepted Answer

A) a unit tax. 
B) a compensated tax. 
C) an income tax. 
D) a price-distorting tax. 
A) a unit tax. 
B) a compensated tax. 
C) an income tax. 
D) a price-distorting tax.

Question 2

A lump sum tax can create an excess burden.

Accepted Answer

A) True 
 B)False

Question 3

Equivalent variation is a method employed to measure excess burden.Comment on why a method such as compensating variation would not be appropriate for this analysis.

Accepted Answer

Compensation variation measures the chan

Question 4

The marginal rate of substitution is

Accepted Answer

A) the slope of the utility curve. 
B) the slope of the contract curve. 
C) the slope of the utility possibilities curve. 
D) none of the above. 
A) the slope of the utility curve. 
B) the slope of the contract curve. 
C) the slope of the utility possibilities curve. 
D) none of the above.

Question 5

The compensated demand curve

Accepted Answer

A) shows how the quantity demanded changes when the price changes. 
B) shows how income is compensated,so that the individual's commodity bundle stays on the same indifference curve. 
C) is sometimes referred to as the Hicksian demand curve. 
D) is all of the above. 
A) shows how the quantity demanded changes when the price changes. 
B) shows how income is compensated,so that the individual's commodity bundle stays on the same indifference curve. 
C) is sometimes referred to as the Hicksian demand curve. 
D) is all of the above.

Question 6

Suppose the inverse demand curve for good A is given by the equation PA = 10 - QA/10,and the supply curve is perfectly elastic (horizontal)at $1.Good A is presently taxed at $2 per unit.Good B (which is independent of good
A)has an inverse demand curve,PB = 5 - QB/20,and is also perfectly elastic at $1.Good B is untaxed.
(A)How much tax revenue is collected and what is the excess burden of the $2 tax on A?
(B)How much revenue is collected if the tax on good A is reduced to $1 per unit and good B is taxed at $1 per unit?
(C)What is the total excess burden of taxing both goods at $1 per unit?
(D)Which tax system is preferable from the point of view of economic efficiency?

Accepted Answer

(A)Tax revenue = (2)(70)=140.Excess burd

Question 7

When a single tax is imposed,the excess burden is proportional to the compensated elasticity of demand and to the square of the tax rate.

Accepted Answer

A) True 
 B)False

Question 8

Suppose that demand is perfectly inelastic.Supply is normal and upward sloping.What is the economic incidence of a unit tax placed on suppliers? Illustrate this with an appropriate diagram.

Accepted Answer

The economic inciden

Question 9

The slope of the production possibilities curve is the

Accepted Answer

A) marginal rate of substitution. 
B) contract curve. 
C) offer curve. 
D) Engel curve. 
E) marginal rate of transformation. 
A) marginal rate of substitution. 
B) contract curve. 
C) offer curve. 
D) Engel curve. 
E) marginal rate of transformation.

Question 10

Which of the following would be an example of a lump-sum tax?

Accepted Answer

A) a compensated tax 
B) a retail sales tax 
C) a head tax 
D) an admission fee 
A) a compensated tax 
B) a retail sales tax 
C) a head tax 
D) an admission fee

Question 11

The VMP is the Value of Marginal Product.

Accepted Answer

A) True 
 B)False

Question 12

An income effect

Accepted Answer

A) is measured as the change in prices over time. 
B) is not possible when people are unemployed. 
C) requires interest rates to remain constant. 
D) is the change in the quantity demand,due to the fact that real income changes when prices change. 
A) is measured as the change in prices over time. 
B) is not possible when people are unemployed. 
C) requires interest rates to remain constant. 
D) is the change in the quantity demand,due to the fact that real income changes when prices change.

Question 13

Taxes that create an excess burden are bad.

Accepted Answer

A) True 
 B)False

Question 14

The economic incidence of a unit tax is

Accepted Answer

A) generally borne by the buyers. 
B) generally borne by sellers. 
C) generally borne by the government. 
D) independent of the statutory incidence for the tax. 
A) generally borne by the buyers. 
B) generally borne by sellers. 
C) generally borne by the government. 
D) independent of the statutory incidence for the tax.

A tax that causes the price that producers receive for a commodity to deviate from the buyer's price is

A lump sum tax can create an excess burden.

Equivalent variation is a method employed to measure excess burden.Comment on why a method such as compensating variation would not be appropriate for this analysis.

The marginal rate of substitution is

The compensated demand curve

When a single tax is imposed,the excess burden is proportional to the compensated elasticity of demand and to the square of the tax rate.

Suppose that demand is perfectly inelastic.Supply is normal and upward sloping.What is the economic incidence of a unit tax placed on suppliers? Illustrate this with an appropriate diagram.

The slope of the production possibilities curve is the

Which of the following would be an example of a lump-sum tax?

The VMP is the Value of Marginal Product.

An income effect

Taxes that create an excess burden are bad.

The economic incidence of a unit tax is

Introduction

Tools of Positive Analysis

Tools of Normative Analysis

Public Goods

Externalities

Political Economy

Education

Cost-Benefit Analysis

The Health Care Market

Government and the Market for Health Care

Social Security

Income Redistribution: Conceptual Issues

Expenditure Programs for the Poor

Taxation and Income Distribution

Efficient and Equitable Taxation

The Personal Income Tax

Personal Taxation and Behavior

The Corporation Tax

Deficit Finance

Fundamental Tax Reform: Taxes on Consumption and Wealth

Public Finance in a Federal System

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Exam 15: Taxation and Efficiency

A tax that causes the price that producers receive for a commodity to deviate from the buyer's price is

A lump sum tax can create an excess burden.

Equivalent variation is a method employed to measure excess burden.Comment on why a method such as compensating variation would not be appropriate for this analysis.

The marginal rate of substitution is

The compensated demand curve

When a single tax is imposed,the excess burden is proportional to the compensated elasticity of demand and to the square of the tax rate.

Suppose that demand is perfectly inelastic.Supply is normal and upward sloping.What is the economic incidence of a unit tax placed on suppliers? Illustrate this with an appropriate diagram.

The slope of the production possibilities curve is the

Which of the following would be an example of a lump-sum tax?

The VMP is the Value of Marginal Product.

An income effect

Taxes that create an excess burden are bad.

The economic incidence of a unit tax is

Introduction

Tools of Positive Analysis

Tools of Normative Analysis

Public Goods

Externalities

Political Economy

Education

Cost-Benefit Analysis

The Health Care Market

Government and the Market for Health Care

Social Security

Income Redistribution: Conceptual Issues

Expenditure Programs for the Poor

Taxation and Income Distribution

Efficient and Equitable Taxation

The Personal Income Tax

Personal Taxation and Behavior

The Corporation Tax

Deficit Finance

Fundamental Tax Reform: Taxes on Consumption and Wealth

Public Finance in a Federal System

Filters