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Exam 7: Taxes

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Question 51

True/False

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The price that buyers pay and the price that sellers receive in the presence of an excise tax are unaffected by which of these groups officially pays the tax.

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Question 52

Multiple Choice

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Given any downward-sloping demand curve for a good, the more inelastic the supply curve, the _____ equilibrium output will fall and the _____ will be the deadweight loss when the government imposes an excise tax.

A) more; smaller
B) more; larger
C) less; smaller
D) less; larger

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Question 53

Multiple Choice

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Use the following to answer questions Figure: Tax Incidence -(Figure: Tax Incidence) Look at the figure Tax Incidence. Based on the figure, the deadweight loss of an excise tax is likely to be greater in panel _____ than in panel _____.

A principle suggesting that people with more income or wealth should pay more taxes is the _____ principle.

State governments levy excise taxes on cigarettes because:

You have to pay a fee every time you use your community swimming pool. This is an example of the _____ principle.

If the elasticity of demand is _____ and the elasticity of supply is _____, tax revenue is likely to increase.

If personal income up to and including $30,000 is not taxed, income of $30,001 to $60,000 is taxed at 10%, and income over $60,000 is taxed at 25%, then a family earning an income of $100,000 will pay a MARGINAL tax rate of:

The burden of a tax on a good is said to fall completely on the producers if the:

Suppose an income tax is levied on none of the first $1,000, 10% of the next $10,000, and 20% of the remainder of earnings. This type of tax can be defined as:

In the United States, taxes tend to be regressive at:

A tax that takes a higher percentage of income as income rises is:

Use the following to answer questions Figure: The Market for Yachts -(Figure: The Market for Yachts) Look at the figure The Market for Yachts. If the government imposes a $60,000 tax on yachts (collected from the producers) , consumers will pay _____ of the tax and producers will pay _____.

Suppose the government decides to fight obesity in America by imposing an excise tax based on the saturated fat content of food. The most likely effect of this tax would be to:

An excise tax is levied on:

According to the _____ principle, those can afford it should pay more tax.

Tax cuts authorized between 2000 and 2004 tended to favor the rich, but the federal tax system remains progressive overall. However, taxes at the state and local level are regressive.

Use the following to answer questions : -(Table: Taxes, Spending, and Income) Look at the table Taxes, Spending, and Income. Suppose Governor Meridias decides to initiate a state tax of 5% on all sales. A poor household will spend _____ of its annual income on the sales tax, while a wealthy household will spend _____ of its annual income.

Taxation according to the ability-to-pay principle is best illustrated in the United States by:

Use the following to answer question Figure: An Excise Tax -(Figure: An Excise Tax) Look at the figure An Excise Tax. If an excise tax equal to $1.10 is imposed on this good, then the price paid by consumers will: