Question 1

Trying to achieve vertical equity by using a progressive income tax structure can create problems with which of the following?

Accepted Answer

A)  horizontal equity 
B)  vertical equity 
C)  benefits received 
D)  tax incidence 
E)  regressive equality 
A)  horizontal equity 
B)  vertical equity 
C)  benefits received 
D)  tax incidence 
E)  regressive equality

Question 2

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,the burden of the tax

Accepted Answer

A)  is split equally between the buyer and the seller. 
B)  falls mostly on buyers. 
C)  falls mostly on sellers. 
D)  falls entirely on buyers. 
E)  falls entirely on sellers. 
A)  is split equally between the buyer and the seller. 
B)  falls mostly on buyers. 
C)  falls mostly on sellers. 
D)  falls entirely on buyers. 
E)  falls entirely on sellers.

Question 3

When each taxpayer pays the same average tax rate regardless of the taxpayer's income,the tax is

Accepted Answer

A)  a regressive tax. 
B)  a progressive tax. 
C)  an estate tax. 
D)  a proportional tax. 
E)  an efficient-price tax. 
A)  a regressive tax. 
B)  a progressive tax. 
C)  an estate tax. 
D)  a proportional tax. 
E)  an efficient-price tax.

Question 4

The marginal tax rate is the

Accepted Answer

A)  average amount paid as taxes. 
B)  percentage of total income that is paid in tax. 
C)  percentage of an additional dollar of income paid in tax. 
D)  total amount of tax paid as a percentage of total income earned. 
E)  same as the average tax rate for a progressive tax. 
A)  average amount paid as taxes. 
B)  percentage of total income that is paid in tax. 
C)  percentage of an additional dollar of income paid in tax. 
D)  total amount of tax paid as a percentage of total income earned. 
E)  same as the average tax rate for a progressive tax.

Question 5

The deadweight loss from a tax is called the

Accepted Answer

A)  marginal benefit of the tax. 
B)  marginal cost of the tax. 
C)  excess burden of the tax. 
D)  net gain from taxation. 
E)  net loss from taxation. 
A)  marginal benefit of the tax. 
B)  marginal cost of the tax. 
C)  excess burden of the tax. 
D)  net gain from taxation. 
E)  net loss from taxation.

Question 6

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,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 7

As a result of the tax on capital income,labor productivity

Accepted Answer

A)  increases. 
B)  decreases. 
C)  fluctuates. 
D)  does not change. 
E)  might change but whether it increases, decreases, or does not change depends on the magnitude of the tax. 
A)  increases. 
B)  decreases. 
C)  fluctuates. 
D)  does not change. 
E)  might change but whether it increases, decreases, or does not change depends on the magnitude of the tax.

Question 8

The sales tax in Dutchess County,New York,is 7.5 percent.This sales tax is

Accepted Answer

A)  fair because everyone pays the same tax. 
B)  proportional. 
C)  regressive. 
D)  progressive. 
E)  an example of the benefit principle of taxation. 
A)  fair because everyone pays the same tax. 
B)  proportional. 
C)  regressive. 
D)  progressive. 
E)  an example of the benefit principle of taxation.

Question 9

The demand for insulin is quite inelastic.The demand for Pepsi is quite elastic.Suppose the elasticity of supply for insulin is the same as the elasticity of supply for Pepsi.If a $0.20 tax was imposed on each of these goods (holding everything else constant),which consumers would pay more of the tax?

Accepted Answer

A)  the Pepsi consumers 
B)  the insulin consumers 
C)  There would be no difference in the amount of tax paid by the consumers. 
D)  More information is needed to determine which consumers pay more of the tax. 
E)  The premise of the question is wrong because the elasticity of demand and the incidence of a tax are not related. 
A)  the Pepsi consumers 
B)  the insulin consumers 
C)  There would be no difference in the amount of tax paid by the consumers. 
D)  More information is needed to determine which consumers pay more of the tax. 
E)  The premise of the question is wrong because the elasticity of demand and the incidence of a tax are not related.

Question 10

Neither the demand nor the supply of sugar is perfectly elastic or inelastic.If the government imposes a 5 percent tax on sugar,the

Accepted Answer

A)  price of sugar buyers pay falls by 5 percent. 
B)  price of sugar buyers pay increases by less then 5 percent. 
C)  price of sugar buyers pay does not change. 
D)  quantity of sugar increases. 
E)  price of sugar buyers pay rises by 5 percent. 
A)  price of sugar buyers pay falls by 5 percent. 
B)  price of sugar buyers pay increases by less then 5 percent. 
C)  price of sugar buyers pay does not change. 
D)  quantity of sugar increases. 
E)  price of sugar buyers pay rises by 5 percent.

Question 11

Consider a Social Security tax on workers versus a Social Security tax on employers.In comparing the outcomes of each type of tax,we see that

Accepted Answer

A)  workers receive a higher take-home wage when the tax is imposed on employers than when the tax is imposed on workers. 
B)  workers receive the same take-home wage when the tax is imposed on workers and when the tax is imposed on employers. 
C)  employers pay a lower total wage when the tax is imposed on workers. 
D)  employment decreases by more when the tax is imposed on employers than when the tax is imposed on workers. 
E)  employment decreases by more when the tax is imposed on workers than when the tax is imposed on employers. 
A)  workers receive a higher take-home wage when the tax is imposed on employers than when the tax is imposed on workers. 
B)  workers receive the same take-home wage when the tax is imposed on workers and when the tax is imposed on employers. 
C)  employers pay a lower total wage when the tax is imposed on workers. 
D)  employment decreases by more when the tax is imposed on employers than when the tax is imposed on workers. 
E)  employment decreases by more when the tax is imposed on workers than when the tax is imposed on employers.

Question 12

The marriage tax problem in the United States is a

Accepted Answer

A)  vertical equity problem because married people pay less than similar single people. 
B)  horizontal equity problem because married people pay more than similar single people. 
C)  benefits principle problem because who benefit more pay less. 
D)  vertical equity problem because married people pay more than similar single people. 
E)  horizontal equity problem because married people pay less than similar single people. 
A)  vertical equity problem because married people pay less than similar single people. 
B)  horizontal equity problem because married people pay more than similar single people. 
C)  benefits principle problem because who benefit more pay less. 
D)  vertical equity problem because married people pay more than similar single people. 
E)  horizontal equity problem because married people pay less than similar single people.

Question 13

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 burden of the tax

Accepted Answer

A)  is split equally between the buyer and the seller. 
B)  falls mostly on buyers. 
C)  falls mostly on sellers. 
D)  falls entirely on buyers. 
E)  falls entirely on sellers. 
A)  is split equally between the buyer and the seller. 
B)  falls mostly on buyers. 
C)  falls mostly on sellers. 
D)  falls entirely on buyers. 
E)  falls entirely on sellers.

Question 14

"In the United States,more tax revenue is collected through Social Security taxes than through property taxes." Is the previous statement correct or incorrect?

Accepted Answer

The statement is correct.Socia

Question 15

-The graph shows the market for textbooks.If the government introduces a tax of $20 a textbook,then the price paid by buyers ________.

Accepted Answer

A)  increases by $20 
B)  increases to $80 a textbook 
C)  decreases to $60 a textbook 
D)  is $70 a textbook 
E)  does not change because the demand for textbooks is perfectly elastic 
A)  increases by $20 
B)  increases to $80 a textbook 
C)  decreases to $60 a textbook 
D)  is $70 a textbook 
E)  does not change because the demand for textbooks is perfectly elastic

Question 16

Regardless of whether a tax is imposed on buyers or sellers,it has the same effects: In general,the price paid by the buyers ________ and the price received by the sellers ________.

Accepted Answer

A)  rises; falls 
B)  rises; rises 
C)  falls; rises 
D)  falls; remains the same 
E)  rises; remains the same 
A)  rises; falls 
B)  rises; rises 
C)  falls; rises 
D)  falls; remains the same 
E)  rises; remains the same

Question 17

Suppose the elasticity of demand for a product is 0 and elasticity of supply is 1.If the government imposes a tax on the product,then

Accepted Answer

A)  buyers and sellers pay exactly the same share of the tax. 
B)  buyers pay all of the tax. 
C)  sellers pay all of the tax. 
D)  buyers pay a smaller share of the tax than do sellers, but both buyers and sellers pay some of the tax. 
E)  because the elasticity of demand is zero, the government collects no revenue from this tax. 
A)  buyers and sellers pay exactly the same share of the tax. 
B)  buyers pay all of the tax. 
C)  sellers pay all of the tax. 
D)  buyers pay a smaller share of the tax than do sellers, but both buyers and sellers pay some of the tax. 
E)  because the elasticity of demand is zero, the government collects no revenue from this tax.

Question 18

For a given supply elasticity,the more inelastic the demand for a good,the larger the share of the tax paid by the

Accepted Answer

A)  buyers. 
B)  sellers. 
C)  participants other than the buyers and sellers. 
D)  government. 
E)  None of the above answers is correct. 
A)  buyers. 
B)  sellers. 
C)  participants other than the buyers and sellers. 
D)  government. 
E)  None of the above answers is correct.

Question 19

If a $2.00 tax per dose of insulin raises the price paid by the buyers by $2.00,then the demand for insulin is perfectly ________ and the buyers pay ________ the tax.

Accepted Answer

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

Question 20

Suppose the supply of labor is more inelastic than the demand for labor.Then,a Social Security tax imposed on employers

Accepted Answer

A)  shifts the demand curve for labor leftward. 
B)  lowers the wage rate received by workers. 
C)  leads to the workers paying more of the tax than the employers. 
D)  Only answers B and C are correct. 
E)  Answers A, B, and C are correct. 
A)  shifts the demand curve for labor leftward. 
B)  lowers the wage rate received by workers. 
C)  leads to the workers paying more of the tax than the employers. 
D)  Only answers B and C are correct. 
E)  Answers A, B, and C are correct.

Trying to achieve vertical equity by using a progressive income tax structure can create problems with which of the following?

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,the burden of the tax

When each taxpayer pays the same average tax rate regardless of the taxpayer's income,the tax is

The marginal tax rate is the

The deadweight loss from a tax is called the

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,the tax the price paid by the buyer by per MP3 player.

As a result of the tax on capital income,labor productivity

The sales tax in Dutchess County,New York,is 7.5 percent.This sales tax is

Neither the demand nor the supply of sugar is perfectly elastic or inelastic.If the government imposes a 5 percent tax on sugar,the

Consider a Social Security tax on workers versus a Social Security tax on employers.In comparing the outcomes of each type of tax,we see that

The marriage tax problem in the United States 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 burden of the tax

"In the United States,more tax revenue is collected through Social Security taxes than through property taxes." Is the previous statement correct or incorrect?

-The graph shows the market for textbooks.If the government introduces a tax of $20 a textbook,then the price paid by buyers ________.

Regardless of whether a tax is imposed on buyers or sellers,it has the same effects: In general,the price paid by the buyers and the price received by the sellers .

Suppose the elasticity of demand for a product is 0 and elasticity of supply is 1.If the government imposes a tax on the product,then

For a given supply elasticity,the more inelastic the demand for a good,the larger the share of the tax paid by the

If a $2.00 tax per dose of insulin raises the price paid by the buyers by $2.00,then the demand for insulin is perfectly and the buyers pay the tax.

Suppose the supply of labor is more inelastic than the demand for labor.Then,a Social Security tax imposed on employers

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

Trying to achieve vertical equity by using a progressive income tax structure can create problems with which of the following?

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,the burden of the tax

When each taxpayer pays the same average tax rate regardless of the taxpayer's income,the tax is

The marginal tax rate is the

The deadweight loss from a tax is called the

As a result of the tax on capital income,labor productivity

The sales tax in Dutchess County,New York,is 7.5 percent.This sales tax is

Neither the demand nor the supply of sugar is perfectly elastic or inelastic.If the government imposes a 5 percent tax on sugar,the

Consider a Social Security tax on workers versus a Social Security tax on employers.In comparing the outcomes of each type of tax,we see that

The marriage tax problem in the United States 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 burden of the tax

"In the United States,more tax revenue is collected through Social Security taxes than through property taxes." Is the previous statement correct or incorrect?

-The graph shows the market for textbooks.If the government introduces a tax of $20 a textbook,then the price paid by buyers ________.

Regardless of whether a tax is imposed on buyers or sellers,it has the same effects: In general,the price paid by the buyers ________ and the price received by the sellers ________.

Suppose the elasticity of demand for a product is 0 and elasticity of supply is 1.If the government imposes a tax on the product,then

For a given supply elasticity,the more inelastic the demand for a good,the larger the share of the tax paid by the

If a $2.00 tax per dose of insulin raises the price paid by the buyers by $2.00,then the demand for insulin is perfectly ________ and the buyers pay ________ the tax.

Suppose the supply of labor is more inelastic than the demand for labor.Then,a Social Security tax imposed on employers

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

Regardless of whether a tax is imposed on buyers or sellers,it has the same effects: In general,the price paid by the buyers and the price received by the sellers .

If a $2.00 tax per dose of insulin raises the price paid by the buyers by $2.00,then the demand for insulin is perfectly and the buyers pay the tax.