Question 1

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

Accepted Answer

A)   A property tax that is proportional to the value of a home is used to fund K-12 education.
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)   The local youth sports leagues are financed by fees collected from participants by the city.F) None of the above
G) A) and B)

Question 2

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.The total tax paid by Dave's employer is equal to

Accepted Answer

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

Question 3

If the supply of capital is perfectly elastic,a tax on capital income results in

Accepted Answer

A)   a deadweight loss and lenders pay all of the tax.
B)   a deadweight loss and borrowers (firms)  pay all of the tax.
C)   no deadweight loss and borrowers (firms)  and lenders split the tax.
D)   no deadweight loss and lenders pay all of the tax.
E)   no deadweight loss and borrowers (firms)  pay all of the tax.F) None of the above
G) A) and B)

Question 4

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.F) B) and D)
G) None of the above

Question 5

Suppose the elasticity of demand for Mexican food is 3.00 and the elasticity of supply is 1.20.If the government imposes a sales tax on Mexican food,which of the following occurs?
i.Less Mexican food is purchased by buyers.
ii.Less Mexican food is produced by sellers.
iii.The government receives the excess burden as revenue.
iv.Both the consumer and the producer surplus decrease.

Accepted Answer

A)   i and ii
B)   iii only
C)   i, ii, and iv
D)   iv only
E)   i, ii, iii, and ivF) A) and E)
G) C) and D)

Question 6

The demand for gasoline is inelastic and the supply of gasoline is elastic.Therefore,

Accepted Answer

A)   sellers bear most of the incidence of a tax on gasoline.
B)   buyers bear most of the incidence of a tax on gasoline.
C)   the government bears most of the incidence of a tax on gasoline.
D)   the incidence of a tax on gasoline depends if the tax is imposed on sellers or on buyers.
E)   None of the above answers is correct.F) B) and C)
G) A) and E)

Question 7

Which of the following types of taxes generates the most revenue for governments in the United States?

Accepted Answer

A)   Social Security tax
B)   personal income tax
C)   property tax
D)   sales tax
E)   excise taxF) A) and C)
G) All of the above

Question 8

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 paysF) A) and C)
G) A) and E)

Question 9

The size of the deadweight loss,or excess burden,of a tax depends on the

Accepted Answer

A)   amount of producer surplus but not the amount of consumer surplus because it is the producers who send the tax revenues to the government.
B)   strength of demand.
C)   strength of supply.
D)   elasticities of demand and supply.
E)   number of demanders and the number of suppliers.F) B) and C)
G) C) and E)

Question 10

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 11

The deadweight loss of a tax

Accepted Answer

A)   is the transfer of income from households to the government.
B)   determines the incidence of a tax.
C)   is part of the total burden of a tax.
D)   is greater than the total burden of a tax.
E)   equals the tax revenue collected by the government.F) A) and C)
G) None of the above

Question 12

In a labor market before any taxes are imposed,the equilibrium wage rate is $10.00 an hour and 10,000 people are employed.The government imposes a 20 percent income tax on workers' incomes.What is the wage rate that workers need to receive so that they can earn $10.00 per hour after the tax is paid? Suppose that after the tax is imposed,the wage rate rises to $12.00 an hour and that only 8,000 workers are employed.How is the tax incidence split between workers and firms?

Accepted Answer

In order to receive a wage of $10.00 an ...

Question 13

The benefits principle of fair taxation means that people

Accepted Answer

A)   pay taxes according to the level of benefits they receive.
B)   pay taxes according to their ability to pay.
C)   with the same ability pay the same taxes.
D)   with a greater ability to pay, pay more taxes.
E)   Answers B, C, and D are correct.F) A) and E)
G) D) and E)

Question 14

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.F) B) and E)
G) A) and B)

Question 15

Because the U.S.income tax is a progressive tax,taxing married couples as two single persons can violate

Accepted Answer

A)   the benefits principle.
B)   the ability-to-pay imperative.
C)   vertical equity.
D)   horizontal equity.
E)   the government's need for more revenue.F) D) and E)
G) A) and B)

Question 16

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 received and kept by sellers and a ________ in the price paid by buyers.

Accepted Answer

A)   rise; rise
B)   rise; fall
C)   fall; rise
D)   fall; fall
E)   no change; riseF) A) and E)
G) None of the above

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.F) A) and D)
G) A) and B)

Question 18

-The above figure shows the demand curves in four different markets.If each of the markets has an identical upward sloping supply curve and the same tax is levied on suppliers,which market would produce the smallest amount of deadweight loss?

Accepted Answer

A)   A
B)   B
C)   C
D)   D
E)   C and DF) B) and D)
G) A) and C)

Question 19

The supply of oil is more elastic than the demand for oil.If oil is taxed $10 per barrel,how will the tax be divided between the buyer and seller?

Accepted Answer

A)   The seller will pay more of the tax than the buyer pays.
B)   The buyer will pay more of the tax than the seller pays.
C)   The seller and buyer will split the tax evenly.
D)   The seller will pay the entire tax.
E)   The buyer will pay the entire tax.F) All of the above
G) C) and D)

Question 20

-In the labor market shown in the graph,the government introduces a 10 percent income tax.The employer pays ________ cents of the tax and the employee pays ________ cents of the tax.

Accepted Answer

A)   45; 50
B)   95; 0
C)   0; 95
D)   50; 45
E)   42.5; 42.5F) A) and B)
G) A) and E)

Exam 8: Taxes

The marriage tax problem in the United States is a

Correct Answer
verified

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

Correct Answer
verified

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?

Correct Answer
verified
Buyers of salt pay m...
View Answer

Which of the following types of taxes generates the most revenue for governments in the United States?

Correct Answer
verified

The benefits principle of fair taxation means that people

Correct Answer
verified

Because the U.S.income tax is a progressive tax,taxing married couples as two single persons can violate

Correct Answer
verified

The size of the deadweight loss,or excess burden,of a tax depends on the

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

-In the labor market shown in the graph,the government introduces a 10 percent income tax.The employer pays cents of the tax and the employee pays cents of the tax.

Correct Answer
verified

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

Correct Answer
verified

If the supply of capital is perfectly elastic,a tax on capital income results in

Correct Answer
verified

The demand for gasoline is inelastic and the supply of gasoline is elastic.Therefore,

Correct Answer
verified

Correct Answer
verified
In order to receive a wage of $10.00 an ...
View Answer

The supply of oil is more elastic than the demand for oil.If oil is taxed $10 per barrel,how will the tax be divided between the buyer and seller?

Correct Answer
verified

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.The total tax paid by Dave's employer is equal to

Correct Answer
verified

Correct Answer
verified

The deadweight loss of a tax

Correct Answer
verified

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

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 received and kept by sellers and a in the price paid by buyers.

Correct Answer
verified

-The above figure shows the demand curves in four different markets.If each of the markets has an identical upward sloping supply curve and the same tax is levied on suppliers,which market would produce the smallest amount of deadweight loss?

Correct Answer
verified

Exam 8: Taxes

The marriage tax problem in the United States is a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedBuyers of salt pay m...View AnswerShow Answer

Which of the following types of taxes generates the most revenue for governments in the United States?

Correct AnswerverifiedShow Answer

The benefits principle of fair taxation means that people

Correct AnswerverifiedShow Answer

Because the U.S.income tax is a progressive tax,taxing married couples as two single persons can violate

Correct AnswerverifiedShow Answer

The size of the deadweight loss,or excess burden,of a tax depends on the

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

-In the labor market shown in the graph,the government introduces a 10 percent income tax.The employer pays ________ cents of the tax and the employee pays ________ cents of the tax.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the supply of capital is perfectly elastic,a tax on capital income results in

Correct AnswerverifiedShow Answer

The demand for gasoline is inelastic and the supply of gasoline is elastic.Therefore,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIn order to receive a wage of $10.00 an ...View AnswerShow Answer

The supply of oil is more elastic than the demand for oil.If oil is taxed $10 per barrel,how will the tax be divided between the buyer and seller?

Correct AnswerverifiedShow Answer

-The above figure shows the labor market for land surveyors.Dave is a land surveyor.The total tax paid by Dave's employer is equal to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The deadweight loss of a tax

Correct AnswerverifiedShow Answer

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

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 received and kept by sellers and a ________ in the price paid by buyers.

Correct AnswerverifiedShow Answer

-The above figure shows the demand curves in four different markets.If each of the markets has an identical upward sloping supply curve and the same tax is levied on suppliers,which market would produce the smallest amount of deadweight loss?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Buyers of salt pay m...
View Answer

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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-In the labor market shown in the graph,the government introduces a 10 percent income tax.The employer pays cents of the tax and the employee pays cents of the tax.

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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In order to receive a wage of $10.00 an ...
View Answer

Correct Answer
verified

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 received and kept by sellers and a in the price paid by buyers.

Correct Answer
verified

Correct Answer
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