Question 1

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of ________ per tire.

Accepted Answer

A)  $10 
B)  $30 
C)  $40 
D)  $60 
E)  None of the above answers is correct. 
A)  $10 
B)  $30 
C)  $40 
D)  $60 
E)  None of the above answers is correct.

Question 2

A sales tax imposed on sellers of a good

Accepted Answer

A)  decreases the demand and shifts the demand curve rightward. 
B)  decreases the supply and shifts the supply curve leftward. 
C)  decreases both the demand and the supply and shifts both the demand and supply curves leftward. 
D)  decreases the supply and shifts the supply curve rightward. 
E)  has no effect on either the demand or the supply. 
A)  decreases the demand and shifts the demand curve rightward. 
B)  decreases the supply and shifts the supply curve leftward. 
C)  decreases both the demand and the supply and shifts both the demand and supply curves leftward. 
D)  decreases the supply and shifts the supply curve rightward. 
E)  has no effect on either the demand or the supply.

Question 3

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S? to S?.The quantity of buckets without the tax is ________ and the quantity with the tax is ________.

Accepted Answer

A)  400; 600 
B)  600; 400 
C)  400; 400 
D)  800; 500 
E)  600; 500 
A)  400; 600 
B)  600; 400 
C)  400; 400 
D)  800; 500 
E)  600; 500

Question 4

-The above figure shows the labor market for land surveyors.The total amount collected as taxes equals

Accepted Answer

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

Question 5

-Adam,Aaron,and Fatima earn,respectively,$30,000,$50,000 and $100,000 per year.The amount of state income taxes they pay on their income depends on which state they choose to live in.The table above shows how much they would pay in taxes in each state.
a.Is the tax in State A progressive,regressive or proportional?
b.Is the tax in State B progressive,regressive or proportional?
c.Is the tax in State C progressive,regressive or proportional?

Accepted Answer

a.Taxes in State A are proportional,beca

Question 6

If the elasticity of demand for a product equals 3 and the supply is perfectly elastic,then if a tax is imposed on this product,

Accepted Answer

A)  the buyer pays all the tax. 
B)  the seller pays all the tax. 
C)  the buyer pays 3/4 of the tax. 
D)  the seller pays 3/4 of the tax. 
E)  the buyer pays 4/3 of the tax. 
A)  the buyer pays all the tax. 
B)  the seller pays all the tax. 
C)  the buyer pays 3/4 of the tax. 
D)  the seller pays 3/4 of the tax. 
E)  the buyer pays 4/3 of the tax.

Question 7

-The figure above shows the impact of an income tax.The deadweight loss created by the income tax equals area

Accepted Answer

A)  bce. 
B)  fed. 
C)  acf. 
D)  feba. 
E)  The question errs because an income tax does not create a deadweight loss. 
A)  bce. 
B)  fed. 
C)  acf. 
D)  feba. 
E)  The question errs because an income tax does not create a deadweight loss.

Question 8

Suppose the demand for specialty car license plates is perfectly inelastic and the supply curve for specialty license plates is upward sloping.A tax is imposed on specialty license plates.Which of the following is true?

Accepted Answer

A)  Drivers pay the smallest share of the tax. 
B)  Drivers pay none of the tax. 
C)  Drivers pay all of the tax. 
D)  The government pays all of the tax. 
E)  The government collects nothing in tax revenues. 
A)  Drivers pay the smallest share of the tax. 
B)  Drivers pay none of the tax. 
C)  Drivers pay all of the tax. 
D)  The government pays all of the tax. 
E)  The government collects nothing in tax revenues.

Question 9

Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic.If the federal government eliminated the 18.4 cents per gallon gasoline tax,the price paid by buyers would

Accepted Answer

A)  decrease by less than 18.4 cents. 
B)  decrease by 18.4 cents. 
C)  decrease by more than 18.4 cents. 
D)  stay the same. 
E)  increase by 18.4 cents. 
A)  decrease by less than 18.4 cents. 
B)  decrease by 18.4 cents. 
C)  decrease by more than 18.4 cents. 
D)  stay the same. 
E)  increase by 18.4 cents.

Question 10

A sales tax on cigarettes would likely decrease the quantity demanded by a smaller amount

Accepted Answer

A)  for smokers who view cigarettes as a necessity. 
B)  for smokers who are not addicted. 
C)  for smokers with smaller incomes. 
D)  the longer the time elapsed. 
E)  for smokers who view cigarettes as a luxury. 
A)  for smokers who view cigarettes as a necessity. 
B)  for smokers who are not addicted. 
C)  for smokers with smaller incomes. 
D)  the longer the time elapsed. 
E)  for smokers who view cigarettes as a luxury.

Question 11

The excess burden of a tax refers to the fact that

Accepted Answer

A)  the benefits from a tax exceed the tax revenue. 
B)  the deadweight loss from a tax exceeds the remaining consumer surplus. 
C)  marginal cost is greater than marginal benefit after the tax. 
D)  a tax creates a deadweight loss. 
E)  taxes are split between buyers and sellers. 
A)  the benefits from a tax exceed the tax revenue. 
B)  the deadweight loss from a tax exceeds the remaining consumer surplus. 
C)  marginal cost is greater than marginal benefit after the tax. 
D)  a tax creates a deadweight loss. 
E)  taxes are split between buyers and sellers.

Question 12

The elasticity of supply of capital is larger than the elasticity of supply of land,so a tax on capital income has ________ deadweight loss and a ________ effect on the equilibrium quantity than does an equal tax on land.

Accepted Answer

A)  a larger; larger 
B)  a larger; smaller 
C)  a smaller; larger 
D)  a smaller; smaller 
E)  no; smaller 
A)  a larger; larger 
B)  a larger; smaller 
C)  a smaller; larger 
D)  a smaller; smaller 
E)  no; smaller

Question 13

What happens to the acceptable wage rate at each level of employment once an income tax is levied on labor income?

Accepted Answer

A)  Nothing, it remains the same. 
B)  It increases by the amount of the tax that must be paid. 
C)  Workers and employers split the tax, so the acceptable wage increases by half the tax. 
D)  Because workers have to work more to make up for the tax, the acceptable wage rate falls by some amount that cannot be determined. 
E)  Because workers have to work more to make up for the tax, the acceptable wage rate falls by the precise amount of the tax that must be paid. 
A)  Nothing, it remains the same. 
B)  It increases by the amount of the tax that must be paid. 
C)  Workers and employers split the tax, so the acceptable wage increases by half the tax. 
D)  Because workers have to work more to make up for the tax, the acceptable wage rate falls by some amount that cannot be determined. 
E)  Because workers have to work more to make up for the tax, the acceptable wage rate falls by the precise amount of the tax that must be paid.

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 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 paid by the buyer is ________ per MP3 player.

Accepted Answer

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

Question 15

If we look at the percentage of total tax revenue collected by different taxes in the United States,we see that

Accepted Answer

A)  personal income taxes are the largest. 
B)  Social Security taxes are the largest. 
C)  excise taxes, while not the largest, are second only to Social Security taxes. 
D)  sales taxes are the smallest. 
E)  corporate income taxes are by far the largest. 
A)  personal income taxes are the largest. 
B)  Social Security taxes are the largest. 
C)  excise taxes, while not the largest, are second only to Social Security taxes. 
D)  sales taxes are the smallest. 
E)  corporate income taxes are by far the largest.

Question 16

Suppose the demand for peaches from South Carolina is perfectly elastic.If the supply curve is upward sloping and a tax is imposed on peaches from South Carolina,then

Accepted Answer

A)  peach sellers pay all of the tax. 
B)  peach buyers pay all of the tax. 
C)  peach buyers and sellers evenly split the tax. 
D)  the government does not collect any revenue from the tax. 
E)  the tax does not change the equilibrium quantity of peaches. 
A)  peach sellers pay all of the tax. 
B)  peach buyers pay all of the tax. 
C)  peach buyers and sellers evenly split the tax. 
D)  the government does not collect any revenue from the tax. 
E)  the tax does not change the equilibrium quantity of peaches.

Question 17

The percentage of an additional dollar that is paid in tax is called

Accepted Answer

A)  the average tax rate. 
B)  the marginal tax rate. 
C)  a proportional tax. 
D)  a progressive tax. 
E)  a regressive tax. 
A)  the average tax rate. 
B)  the marginal tax rate. 
C)  a proportional tax. 
D)  a progressive tax. 
E)  a regressive tax.

Question 18

If Sam pays $2,000 in taxes on an income of $20,000 and $2,800 in taxes on an income of $30,000,the tax rate is

Accepted Answer

A)  regressive. 
B)  proportional. 
C)  progressive. 
D)  vertically fair 
E)  not enough information is given to determine the answer. 
A)  regressive. 
B)  proportional. 
C)  progressive. 
D)  vertically fair 
E)  not enough information is given to determine the answer.

Question 19

-The figure above shows the impact of an income tax.The revenue collected by the government equals area

Accepted Answer

A)  bce. 
B)  feba. 
C)  fed. 
D)  acf. 
E)  None of the above answers is correct. 
A)  bce. 
B)  feba. 
C)  fed. 
D)  acf. 
E)  None of the above answers is correct.

Question 20

-The graph shows the market for cell phones.The government imposes a sales tax on cell phones at $10 a cell phone.The excess burden of the sales tax on cell phones is ________.

Accepted Answer

A)  $20,000 
B)  $15,000 
C)  $35,000 
D)  $7,500 
E)  $30,000 
A)  $20,000 
B)  $15,000 
C)  $35,000 
D)  $7,500 
E)  $30,000

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of ________ per tire.

A sales tax imposed on sellers of a good

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S? to S?.The quantity of buckets without the tax is and the quantity with the tax is .

-The above figure shows the labor market for land surveyors.The total amount collected as taxes equals

If the elasticity of demand for a product equals 3 and the supply is perfectly elastic,then if a tax is imposed on this product,

-The figure above shows the impact of an income tax.The deadweight loss created by the income tax equals area

Suppose the demand for specialty car license plates is perfectly inelastic and the supply curve for specialty license plates is upward sloping.A tax is imposed on specialty license plates.Which of the following is true?

Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic.If the federal government eliminated the 18.4 cents per gallon gasoline tax,the price paid by buyers would

A sales tax on cigarettes would likely decrease the quantity demanded by a smaller amount

The excess burden of a tax refers to the fact that

The elasticity of supply of capital is larger than the elasticity of supply of land,so a tax on capital income has deadweight loss and a effect on the equilibrium quantity than does an equal tax on land.

What happens to the acceptable wage rate at each level of employment once an income tax is levied on labor income?

If we look at the percentage of total tax revenue collected by different taxes in the United States,we see that

Suppose the demand for peaches from South Carolina is perfectly elastic.If the supply curve is upward sloping and a tax is imposed on peaches from South Carolina,then

The percentage of an additional dollar that is paid in tax is called

If Sam pays $2,000 in taxes on an income of $20,000 and $2,800 in taxes on an income of $30,000,the tax rate is

-The figure above shows the impact of an income tax.The revenue collected by the government equals area

-The graph shows the market for cell phones.The government imposes a sales tax on cell phones at $10 a cell phone.The excess burden of the sales tax on cell phones 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

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of ________ per tire.

A sales tax imposed on sellers of a good

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S? to S?.The quantity of buckets without the tax is ________ and the quantity with the tax is ________.

-The above figure shows the labor market for land surveyors.The total amount collected as taxes equals

If the elasticity of demand for a product equals 3 and the supply is perfectly elastic,then if a tax is imposed on this product,

-The figure above shows the impact of an income tax.The deadweight loss created by the income tax equals area

Suppose the demand for specialty car license plates is perfectly inelastic and the supply curve for specialty license plates is upward sloping.A tax is imposed on specialty license plates.Which of the following is true?

Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic.If the federal government eliminated the 18.4 cents per gallon gasoline tax,the price paid by buyers would

A sales tax on cigarettes would likely decrease the quantity demanded by a smaller amount

The excess burden of a tax refers to the fact that

The elasticity of supply of capital is larger than the elasticity of supply of land,so a tax on capital income has ________ deadweight loss and a ________ effect on the equilibrium quantity than does an equal tax on land.

What happens to the acceptable wage rate at each level of employment once an income tax is levied on labor income?

If we look at the percentage of total tax revenue collected by different taxes in the United States,we see that

Suppose the demand for peaches from South Carolina is perfectly elastic.If the supply curve is upward sloping and a tax is imposed on peaches from South Carolina,then

The percentage of an additional dollar that is paid in tax is called

If Sam pays $2,000 in taxes on an income of $20,000 and $2,800 in taxes on an income of $30,000,the tax rate is

-The figure above shows the impact of an income tax.The revenue collected by the government equals area

-The graph shows the market for cell phones.The government imposes a sales tax on cell phones at $10 a cell phone.The excess burden of the sales tax on cell phones 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

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S? to S?.The quantity of buckets without the tax is and the quantity with the tax is .

The elasticity of supply of capital is larger than the elasticity of supply of land,so a tax on capital income has deadweight loss and a effect on the equilibrium quantity than does an equal tax on land.