Question 1

-The figure above shows the market for a life-saving drug.Suppose the government imposes a $150 tax per dose on the drug.Show and describe the impact on the market.Who pays this tax?

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> The tax decreases the supply and shifts...

Question 2

If the supply of capital is perfectly ________ end up paying the tax on capital income.

Accepted Answer

A)  elastic, lenders
B)  elastic, firms that demand capital
C)  inelastic, lenders
D)  inelastic, firms that demand capital
E)  unit elastic, firms that demand capital

Question 3

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 creates
E)  eliminates; eliminates

Question 4

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

Question 5

The demand curve for pizza is downward sloping and the supply curve is upward sloping.If the government imposes a $2 tax on a pizza, ________ the tax.

Accepted Answer

A)  only consumers pay
B)  only producers pay
C)  both producers and consumers pay part of
D)  neither producers nor consumers pay part of
E)  the government pays

Question 6

What is the difference in the tax incidence between imposing the Social Security tax on workers and imposing the same tax on employers?

Accepted Answer

There is no difference; the ta...

Question 7

Which of the following taxes best illustrate the benefits principle of tax fairness?

Accepted Answer

A)  Roads and highways are built and maintained through a tax on gasoline.
B)  The local library is funded through property taxes levied on all homeowners.
C)  The WIC program provides food to low income mothers and is funded through the federal income tax.
D)  A sales tax on food pays for local police and fire protection.
E)  City parks are maintained through local excise taxes.

Question 8

Consider the two principles of fair taxation, the benefits principle and the ability-to-pay principle,

Accepted Answer

A)  Both state that people should pay taxes according to the benefits they receive from public services.
B)  Both state that people should pay taxes according to how easily they can bear the burden.
C)  Both are based on horizontal equity.
D)  Both present conflicting ideas on the fairness of taxes.
E)  Both are based on vertical equity.

Question 9

Which of the following taxes guarantees vertical equity?
i. income tax
ii. social security tax on workers
iii. social security tax on employers

Accepted Answer

A)  i only
B)  i and ii
C)  ii and iii
D)  iii only
E)  None of the above taxes guarantees vertical equity.

Question 10

-The figure above shows the market for gasoline.The government has imposed a tax on gasoline.
a∙What is the amount of the tax per gallon of gasoline?
b∙How much tax revenue will government collect from this tax?
c∙How much of the tax is paid by buyers? How much is paid by sellers? Which is more elastic, the supply or demand for gasoline?

Accepted Answer

a∙The tax is $1.50 per gallon, the amoun...

Question 11

-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 S₀ to S₁.The amount of this tax is ________ per bucket of golf balls.

Accepted Answer

A)  $4
B)  $2
C)  $2.50
D)  $1
E)  $3

Question 12

The proposition that people should pay taxes according to how easily they can bear the burden is known as the ________ principle.

Accepted Answer

A)  regressive tax
B)  benefits
C)  ability-to-pay
D)  fairness
E)  incidence of fairness

Question 13

Which of the following is correct?

Accepted Answer

A)  If your income is $20,000 and you are paying $2,000 in taxes, your marginal tax rate is 10 percent.
B)  If your income is $20,000 and you are paying $2,000 in income taxes, the income tax you are paying is progressive.
C)  If you paid $0.39 as tax from an additional dollar you earned, your marginal tax rate is 39 percent.
D)  If your marginal tax rate falls as your income increases, the tax is progressive.
E)  If your income is $20,000 and you are paying $2,000 in income taxes, the income tax you are paying is proportional.

Question 14

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.

Question 15

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.

Question 16

-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.

Question 17

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

Question 18

If the average tax rate ________ as income increases, then the tax is a ________ tax.

Accepted Answer

A)  does not change; proportional
B)  does not change; regressive
C)  decreases; progressive
D)  decreases; proportional
E)  increases; regressive

Question 19

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.

Question 20

The deadweight loss from a tax

Accepted Answer

A)  is the tax revenue the government collects when people die.
B)  is the split of a tax between the amount paid and the amount collected.
C)  equals the amount collected as revenue from the tax.
D)  is called the excess burden of the tax.
E)  equals the amount collected as revenue from the tax plus the excess burden of the tax.

Exam 8: Taxes

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.

Correct Answer
verified

-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 S₀ to S₁.The amount of this tax is ________ per bucket of golf balls.

Correct Answer
verified

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

Correct Answer
verified

Consider the two principles of fair taxation, the benefits principle and the ability-to-pay principle,

Correct Answer
verified

What is the difference in the tax incidence between imposing the Social Security tax on workers and imposing the same tax on employers?

Correct Answer
verified
There is no difference; the ta...
View Answer

Correct Answer
verified
a∙The tax is $1.50 per gallon, the amoun...
View Answer

The proposition that people should pay taxes according to how easily they can bear the burden is known as the ________ principle.

Correct Answer
verified

-The figure above shows the market for a life-saving drug.Suppose the government imposes a $150 tax per dose on the drug.Show and describe the impact on the market.Who pays this tax?

Correct Answer
verified
The tax decreases the supply and shifts...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

The demand curve for pizza is downward sloping and the supply curve is upward sloping.If the government imposes a $2 tax on a pizza, ________ the tax.

Correct Answer
verified

Which of the following taxes best illustrate the benefits principle of tax fairness?

Correct Answer
verified

The deadweight loss from a tax

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

Correct Answer
verified

Which of the following is correct?

Correct Answer
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If the supply of capital is perfectly ________ end up paying the tax on capital income.

Correct Answer
verified

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

Correct Answer
verified

The marginal tax rate is the

Correct Answer
verified

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.

Correct Answer
verified

Which of the following taxes guarantees vertical equity? i. income tax ii. social security tax on workers iii. social security tax on employers

Correct Answer
verified

Exam 8: Taxes

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.

Correct AnswerverifiedShow Answer

-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 S₀ to S₁.The amount of this tax is ________ per bucket of golf balls.

Correct AnswerverifiedShow Answer

If the average tax rate ________ as income increases, then the tax is a ________ tax.

Correct AnswerverifiedShow Answer

Consider the two principles of fair taxation, the benefits principle and the ability-to-pay principle,

Correct AnswerverifiedShow Answer

What is the difference in the tax incidence between imposing the Social Security tax on workers and imposing the same tax on employers?

Correct AnswerverifiedThere is no difference; the ta...View AnswerShow Answer

Correct Answerverifieda∙The tax is $1.50 per gallon, the amoun...View AnswerShow Answer

The proposition that people should pay taxes according to how easily they can bear the burden is known as the ________ principle.

Correct AnswerverifiedShow Answer

-The figure above shows the market for a life-saving drug.Suppose the government imposes a $150 tax per dose on the drug.Show and describe the impact on the market.Who pays this tax?

Correct Answerverified The tax decreases the supply and shifts...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The demand curve for pizza is downward sloping and the supply curve is upward sloping.If the government imposes a $2 tax on a pizza, ________ the tax.

Correct AnswerverifiedShow Answer

Which of the following taxes best illustrate the benefits principle of tax fairness?

Correct AnswerverifiedShow Answer

The deadweight loss from a tax

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

If the supply of capital is perfectly ________ end up paying the tax on capital income.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The marginal tax rate is the

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Which of the following taxes guarantees vertical equity? i. income tax ii. social security tax on workers iii. social security tax on employers

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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If the average tax rate as income increases, then the tax is a tax.

Correct Answer
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Correct Answer
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Correct Answer
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There is no difference; the ta...
View Answer

Correct Answer
verified
a∙The tax is $1.50 per gallon, the amoun...
View Answer

Correct Answer
verified

Correct Answer
verified
The tax decreases the supply and shifts...
View Answer

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

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.

Correct Answer
verified

Correct Answer
verified