Question 1

Because the supply of land is perfectly inelastic,a tax on land income

Accepted Answer

A)  is paid entirely by the suppliers. 
B)  is paid entirely by the demanders. 
C)  is shared equally between the suppliers and the demanders. 
D)  is shared, but not equally, between the suppliers and the demanders. 
E)  creates a deadweight loss. 
A)  is paid entirely by the suppliers. 
B)  is paid entirely by the demanders. 
C)  is shared equally between the suppliers and the demanders. 
D)  is shared, but not equally, between the suppliers and the demanders. 
E)  creates a deadweight loss.

Question 2

Suppose the government decides to tax salt.The demand for salt is inelastic and the supply is quite elastic.Who bears most of the tax incidence and pays most of this tax?

Accepted Answer

Buyers of salt pay m

Question 3

Why do sellers pay all of a tax when supply is perfectly inelastic?

Accepted Answer

A)  because a perfectly inelastic supply means that the demand is elastic 
B)  because the government requires firms to collect the tax 
C)  because a perfectly inelastic supply means that the quantity supplied is quite sensitive to a change in price 
D)  because a perfectly inelastic supply means that suppliers will produce the same amount regardless of the price 
E)  because in this case the price of the good that suppliers receive and keep does not change 
A)  because a perfectly inelastic supply means that the demand is elastic 
B)  because the government requires firms to collect the tax 
C)  because a perfectly inelastic supply means that the quantity supplied is quite sensitive to a change in price 
D)  because a perfectly inelastic supply means that suppliers will produce the same amount regardless of the price 
E)  because in this case the price of the good that suppliers receive and keep does not change

Question 4

Consider the market for dining at Mexican restaurants.Suppose the price elasticity of demand for Mexican food is 1.23 and the price elasticity of supply is 0.47.If the government imposes a tax on Mexican food,do buyers or sellers pay most of the tax? Why?

Accepted Answer

Sellers pay most of the tax because supp

Question 5

-The figure above shows the market for tires.The government has imposed a tax on tires,and the buyers pay ________ of the tax.

Accepted Answer

A)  $10 
B)  $20 
C)  $50 
D)  $60 
E)  $30 
A)  $10 
B)  $20 
C)  $50 
D)  $60 
E)  $30

Question 6

The 2010 health care reform included a 10 percent tax on indoor tanning services.This tax would reflect ________ if indoor tanning leads to higher usage of government paid health care services from skin cancer.

Accepted Answer

A)  the benefits principle of taxation 
B)  the ability-to-pay principle of taxation 
C)  horizontal equity 
D)  vertical equity 
E)  a regressive tax 
A)  the benefits principle of taxation 
B)  the ability-to-pay principle of taxation 
C)  horizontal equity 
D)  vertical equity 
E)  a regressive tax

Question 7

The idea that taxpayers with the same ability to pay a tax should pay the same taxes is called

Accepted Answer

A)  progressive taxes. 
B)  regressive taxes. 
C)  horizontal equity. 
D)  vertical equity. 
E)  fair-incidence principle. 
A)  progressive taxes. 
B)  regressive taxes. 
C)  horizontal equity. 
D)  vertical equity. 
E)  fair-incidence principle.

Question 8

If a $1 sales tax is imposed on the sale of a CD,and neither the demand nor the supply is perfectly elastic or perfectly inelastic,then the price of a CD paid by consumers will

Accepted Answer

A)  increase by $1 and fewer CDs will be bought. 
B)  increase by less than $1 and fewer CDs will be bought. 
C)  not change and the same number of CDs will be bought. 
D)  increase by $1 and the same number of CDs will be bought. 
E)  increase by more than $1 and fewer CDs will be bought. 
A)  increase by $1 and fewer CDs will be bought. 
B)  increase by less than $1 and fewer CDs will be bought. 
C)  not change and the same number of CDs will be bought. 
D)  increase by $1 and the same number of CDs will be bought. 
E)  increase by more than $1 and fewer CDs will be bought.

Question 9

Neither the supply of nor demand for a good is perfectly elastic or perfectly inelastic.So,imposing a tax on the good results in a ________ in the price paid by buyers and ________ in the equilibrium quantity.

Accepted Answer

A)  rise; an increase 
B)  rise; a decrease 
C)  fall; an increase 
D)  fall; a decrease 
E)  a rise; no change 
A)  rise; an increase 
B)  rise; a decrease 
C)  fall; an increase 
D)  fall; a decrease 
E)  a rise; no change

Question 10

Sales taxes are usually collected from sellers,who view the tax as

Accepted Answer

A)  resulting from a leftward of the demand curve. 
B)  an additional cost of selling the good. 
C)  an addition to the demand for the product. 
D)  an addition to profit. 
E)  the same as a rightward shift of the demand curve. 
A)  resulting from a leftward of the demand curve. 
B)  an additional cost of selling the good. 
C)  an addition to the demand for the product. 
D)  an addition to profit. 
E)  the same as a rightward shift of the demand curve.

Because the supply of land is perfectly inelastic,a tax on land income

Suppose the government decides to tax salt.The demand for salt is inelastic and the supply is quite elastic.Who bears most of the tax incidence and pays most of this tax?

Why do sellers pay all of a tax when supply is perfectly inelastic?

Consider the market for dining at Mexican restaurants.Suppose the price elasticity of demand for Mexican food is 1.23 and the price elasticity of supply is 0.47.If the government imposes a tax on Mexican food,do buyers or sellers pay most of the tax? Why?

-The figure above shows the market for tires.The government has imposed a tax on tires,and the buyers pay ________ of the tax.

The 2010 health care reform included a 10 percent tax on indoor tanning services.This tax would reflect ________ if indoor tanning leads to higher usage of government paid health care services from skin cancer.

The idea that taxpayers with the same ability to pay a tax should pay the same taxes is called

If a $1 sales tax is imposed on the sale of a CD,and neither the demand nor the supply is perfectly elastic or perfectly inelastic,then the price of a CD paid by consumers will

Neither the supply of nor demand for a good is perfectly elastic or perfectly inelastic.So,imposing a tax on the good results in a in the price paid by buyers and in the equilibrium quantity.

Sales taxes are usually collected from sellers,who view the tax as

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

Because the supply of land is perfectly inelastic,a tax on land income

Suppose the government decides to tax salt.The demand for salt is inelastic and the supply is quite elastic.Who bears most of the tax incidence and pays most of this tax?

Why do sellers pay all of a tax when supply is perfectly inelastic?

Consider the market for dining at Mexican restaurants.Suppose the price elasticity of demand for Mexican food is 1.23 and the price elasticity of supply is 0.47.If the government imposes a tax on Mexican food,do buyers or sellers pay most of the tax? Why?

-The figure above shows the market for tires.The government has imposed a tax on tires,and the buyers pay ________ of the tax.

The 2010 health care reform included a 10 percent tax on indoor tanning services.This tax would reflect ________ if indoor tanning leads to higher usage of government paid health care services from skin cancer.

The idea that taxpayers with the same ability to pay a tax should pay the same taxes is called

If a $1 sales tax is imposed on the sale of a CD,and neither the demand nor the supply is perfectly elastic or perfectly inelastic,then the price of a CD paid by consumers will

Neither the supply of nor demand for a good is perfectly elastic or perfectly inelastic.So,imposing a tax on the good results in a ________ in the price paid by buyers and ________ in the equilibrium quantity.

Sales taxes are usually collected from sellers,who view the tax as

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

Neither the supply of nor demand for a good is perfectly elastic or perfectly inelastic.So,imposing a tax on the good results in a in the price paid by buyers and in the equilibrium quantity.