Question 1

If a tax is placed on suppliers of a good,then the incidence of the tax

Accepted Answer

A)  falls more on the sellers if demand is elastic. 
B)  falls more on the sellers if demand is inelastic. 
C)  is usually split equally between the buyers and the sellers. 
D)  usually falls more on the sellers than the buyers. 
E)  usually falls more on the buyers than the sellers. 
A)  falls more on the sellers if demand is elastic. 
B)  falls more on the sellers if demand is inelastic. 
C)  is usually split equally between the buyers and the sellers. 
D)  usually falls more on the sellers than the buyers. 
E)  usually falls more on the buyers than the sellers.

Question 2

A tax

Accepted Answer

A)  places a wedge between the price paid by the buyers and the price received by the sellers. 
B)  reduces consumer surplus and producer surplus. 
C)  decreases government spending. 
D)  Both answers A and B are correct. 
E)  None of the above answers is correct. 
A)  places a wedge between the price paid by the buyers and the price received by the sellers. 
B)  reduces consumer surplus and producer surplus. 
C)  decreases government spending. 
D)  Both answers A and B are correct. 
E)  None of the above answers is correct.

Question 3

If neither the demand nor the supply for goods or labor is perfectly inelastic,then a sales tax on a good ________ a deadweight loss and an income tax ________ a deadweight loss.

Accepted Answer

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

Question 4

Describe the effects of an increase in the tax on labor income.

Accepted Answer

An increase in the income tax imposed on

Question 5

The size of the deadweight loss,or excess burden,of a tax depends on the

Accepted Answer

A)  amount of producer surplus but not the amount of consumer surplus because it is the producers who send the tax revenues to the government. 
B)  strength of demand. 
C)  strength of supply. 
D)  elasticities of demand and supply. 
E)  number of demanders and the number of suppliers. 
A)  amount of producer surplus but not the amount of consumer surplus because it is the producers who send the tax revenues to the government. 
B)  strength of demand. 
C)  strength of supply. 
D)  elasticities of demand and supply. 
E)  number of demanders and the number of suppliers.

Question 6

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 7

-In the figure above,suppose that the government imposes a tax of $4 per pizza.Then,the tax revenue collected by the government equals

Accepted Answer

A)  $240. 
B)  $320. 
C)  $160. 
D)  $120. 
E)  $4. 
A)  $240. 
B)  $320. 
C)  $160. 
D)  $120. 
E)  $4.

Question 8

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

Question 9

If Congress wanted to change the Social Security tax so that firms paid most of the tax,they would need to

Accepted Answer

A)  change the tax laws so that all of the Social Security tax was imposed on firms. 
B)  change the tax laws so that all of the Social Security tax was imposed on workers. 
C)  change the tax laws so that more than 50 percent of the Social Security tax was imposed on firms. 
D)  change the tax laws so that more than 50 percent of the Social Security tax was imposed on workers. 
E)  None of the above because the incidence of the Social Security tax does not depend on the tax laws but instead depends on the elasticities of the demand for labor and the supply of labor. 
A)  change the tax laws so that all of the Social Security tax was imposed on firms. 
B)  change the tax laws so that all of the Social Security tax was imposed on workers. 
C)  change the tax laws so that more than 50 percent of the Social Security tax was imposed on firms. 
D)  change the tax laws so that more than 50 percent of the Social Security tax was imposed on workers. 
E)  None of the above because the incidence of the Social Security tax does not depend on the tax laws but instead depends on the elasticities of the demand for labor and the supply of labor.

Question 10

-The above figure shows the market for capital.With the tax on capital income,the deadweight loss is equal to

Accepted Answer

A)  area A + area B + area C. 
B)  area C + area D + area G. 
C)  area C. 
D)  area B + area F. 
E)  area D. 
A)  area A + area B + area C. 
B)  area C + area D + area G. 
C)  area C. 
D)  area B + area F. 
E)  area D.

Question 11

In 2010,Social Security taxes of over 11 percent were imposed on all income up to $104,000.For income that exceeded $104,000,no Social Security tax was imposed.Hence the Social Security tax is a

Accepted Answer

A)  progressive tax. 
B)  proportional tax. 
C)  regressive tax. 
D)  fair-incidence tax. 
E)  type of tax that is impossible to determine without more information. 
A)  progressive tax. 
B)  proportional tax. 
C)  regressive tax. 
D)  fair-incidence tax. 
E)  type of tax that is impossible to determine without more information.

Question 12

"For the U.S.personal income tax,the average tax rate is greater than the marginal tax rate." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.The U.S.perso

Question 13

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

Accepted Answer

A)  progressive tax. 
B)  regressive tax. 
C)  proportional tax. 
D)  marginal tax. 
E)  production-efficient tax. 
A)  progressive tax. 
B)  regressive tax. 
C)  proportional tax. 
D)  marginal tax. 
E)  production-efficient tax.

Question 14

The figure above shows the market for MP3 players, where S is the supply curve and D is the demand curve before any tax. The government imposes a $10 per unit tax on buyers of MP3 players.
-Based on the figure above,the tax ________ the price paid by the buyer by ________ per MP3 player.

Accepted Answer

A)  raises; $5 
B)  lowers; $5 
C)  raises; $10 
D)  lowers; $10 
E)  raises; $7.50 
A)  raises; $5 
B)  lowers; $5 
C)  raises; $10 
D)  lowers; $10 
E)  raises; $7.50

Question 15

If the average tax rate remains constant as income changes,the tax is

Accepted Answer

A)  progressive. 
B)  proportional. 
C)  regressive. 
D)  definitely fair. 
E)  impossible to determine with the information given. 
A)  progressive. 
B)  proportional. 
C)  regressive. 
D)  definitely fair. 
E)  impossible to determine with the information given.

Question 16

-The figure above shows the capital market.
a.Before the government takes any action,what is the interest rate and quantity of capital?
b.Suppose the government imposes a tax of 25 percent on the income from capital.After the tax,what is the equilibrium interest rate and quantity of capital? What is the after-tax interest rate?
c.In the figure,darken the area that equals the deadweight loss from the tax.

Accepted Answer

@#IMG-DLM& 
a.The interest rate before the tax is

Question 17

Joan's income is $60,000 and she pays $6,000 in taxes.Juan's income is $40,000 and he pays $7,000 in taxes.This situation violates

Accepted Answer

A)  the benefits principle. 
B)  the big tradeoff. 
C)  vertical equity. 
D)  horizontal equity. 
E)  the fair-tax incidence principle. 
A)  the benefits principle. 
B)  the big tradeoff. 
C)  vertical equity. 
D)  horizontal equity. 
E)  the fair-tax incidence principle.

Question 18

The demand curve for blue marker pens horizontal so the demand is perfectly ________.A tax of 50 cents lowers the price received by the seller by 50 cents and the seller pays ________ the tax.

Accepted Answer

A)  elastic; all 
B)  inelastic; all 
C)  inelastic; some of 
D)  inelastic; none of 
E)  elastic; none of 
A)  elastic; all 
B)  inelastic; all 
C)  inelastic; some of 
D)  inelastic; none of 
E)  elastic; none of

Question 19

The figure above shows the demand (D) and supply (S) curves for insulin before any tax is imposed. The government imposes a $0.20 a dose tax on sellers of insulin.
-Based on the figure above,at the market equilibrium with the tax,marginal benefit ________ marginal cost,and the quantity of insulin sold is ________.

Accepted Answer

A)  equals; efficient 
B)  exceeds; inefficient 
C)  is below; inefficient 
D)  is below; efficient 
E)  exceeds; efficient 
A)  equals; efficient 
B)  exceeds; inefficient 
C)  is below; inefficient 
D)  is below; efficient 
E)  exceeds; efficient

Question 20

The figure above shows the market for MP3 players, where S is the supply curve and D is the demand curve before any tax is imposed. The government imposes a $10 per unit tax on sellers of MP3 players.
-Based on the figure above,after the tax is imposed,the price received (and kept)by the seller is ________ per MP3 player.

Accepted Answer

A)  $95 
B)  $105 
C)  $100 
D)  $110 
E)  $90 
A)  $95 
B)  $105 
C)  $100 
D)  $110 
E)  $90

If a tax is placed on suppliers of a good,then the incidence of the tax

A tax

If neither the demand nor the supply for goods or labor is perfectly inelastic,then a sales tax on a good a deadweight loss and an income tax a deadweight loss.

Describe the effects of an increase in the tax on labor income.

The size of the deadweight loss,or excess burden,of a tax depends on the

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.

-In the figure above,suppose that the government imposes a tax of $4 per pizza.Then,the tax revenue collected by the government equals

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

If Congress wanted to change the Social Security tax so that firms paid most of the tax,they would need to

-The above figure shows the market for capital.With the tax on capital income,the deadweight loss is equal to

In 2010,Social Security taxes of over 11 percent were imposed on all income up to $104,000.For income that exceeded $104,000,no Social Security tax was imposed.Hence the Social Security tax is a

"For the U.S.personal income tax,the average tax rate is greater than the marginal tax rate." Is the previous statement correct or incorrect?

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

The figure above shows the market for MP3 players, where S is the supply curve and D is the demand curve before any tax. The government imposes a $10 per unit tax on buyers of MP3 players. -Based on the figure above,the tax the price paid by the buyer by per MP3 player.

If the average tax rate remains constant as income changes,the tax is

Joan's income is $60,000 and she pays $6,000 in taxes.Juan's income is $40,000 and he pays $7,000 in taxes.This situation violates

The demand curve for blue marker pens horizontal so the demand is perfectly .A tax of 50 cents lowers the price received by the seller by 50 cents and the seller pays the tax.

The figure above shows the demand (D) and supply (S) curves for insulin before any tax is imposed. The government imposes a $0.20 a dose tax on sellers of insulin. -Based on the figure above,at the market equilibrium with the tax,marginal benefit marginal cost,and the quantity of insulin sold is .

Getting Started

The U.S.and 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

If a tax is placed on suppliers of a good,then the incidence of the tax

A tax

If neither the demand nor the supply for goods or labor is perfectly inelastic,then a sales tax on a good ________ a deadweight loss and an income tax ________ a deadweight loss.

Describe the effects of an increase in the tax on labor income.

The size of the deadweight loss,or excess burden,of a tax depends on the

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.

-In the figure above,suppose that the government imposes a tax of $4 per pizza.Then,the tax revenue collected by the government equals

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

If Congress wanted to change the Social Security tax so that firms paid most of the tax,they would need to

-The above figure shows the market for capital.With the tax on capital income,the deadweight loss is equal to

In 2010,Social Security taxes of over 11 percent were imposed on all income up to $104,000.For income that exceeded $104,000,no Social Security tax was imposed.Hence the Social Security tax is a

"For the U.S.personal income tax,the average tax rate is greater than the marginal tax rate." Is the previous statement correct or incorrect?

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

The figure above shows the market for MP3 players, where S is the supply curve and D is the demand curve before any tax. The government imposes a $10 per unit tax on buyers of MP3 players. -Based on the figure above,the tax ________ the price paid by the buyer by ________ per MP3 player.

If the average tax rate remains constant as income changes,the tax is

Joan's income is $60,000 and she pays $6,000 in taxes.Juan's income is $40,000 and he pays $7,000 in taxes.This situation violates

The demand curve for blue marker pens horizontal so the demand is perfectly ________.A tax of 50 cents lowers the price received by the seller by 50 cents and the seller pays ________ the tax.

Getting Started

The U.S.and 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

If neither the demand nor the supply for goods or labor is perfectly inelastic,then a sales tax on a good a deadweight loss and an income tax a deadweight loss.

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

The figure above shows the market for MP3 players, where S is the supply curve and D is the demand curve before any tax. The government imposes a $10 per unit tax on buyers of MP3 players. -Based on the figure above,the tax the price paid by the buyer by per MP3 player.

The demand curve for blue marker pens horizontal so the demand is perfectly .A tax of 50 cents lowers the price received by the seller by 50 cents and the seller pays the tax.