Question 1

Because the supply of capital is highly elastic,taxing the income from capital results in
i.firms that demand capital paying the greater share of the tax.
ii.a decrease in the equilibrium quantity of capital.
iii.a deadweight loss.

Accepted Answer

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

Question 2

If there is an income tax levied on labor income,the labor demand curve ________ and the labor supply curve ________.

Accepted Answer

A)   shifts rightward; does not shift
B)   shifts leftward; does not shift
C)   does not shift; shifts rightward
D)   does not shift; shifts leftward
E)   shifts leftward; shifts leftward

Question 3

For 2011,the federal government reduced the Social Security tax on workers by 2 percentage points.This will likely cause

Accepted Answer

A)   an increase in the quantity of workers employed and a decrease in deadweight loss.
B)   an increase in the quantity of workers employed and an increase in deadweight loss.
C)   a decrease in the quantity of workers employed and a decrease in deadweight loss.
D)   a decrease in the quantity of workers employed and an increase in deadweight loss.
E)   no change in the quantity of workers employed since the demand for labor is more elastic than the supply of labor.

Question 4

Suppose the elasticity of supply of land is 0 and elasticity of demand is 2.If the government imposes a 10 percent tax on land,then

Accepted Answer

A)   buyers and sellers each pay 5 percent of the tax.
B)   buyers pay all of the tax.
C)   sellers pay all of the tax.
D)   sellers pay a smaller share of the tax than do buyers but both buyers and sellers pay some of the tax.
E)   buyers pay 1/2 of the tax.

Question 5

Giving in to the demand of protestors,suppose the French government reduces the tax on gasoline by 15 percent.Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic.As a result of the tax cut,the price for a gallon of gasoline paid by buyers

Accepted Answer

A)   falls by 15 percent.
B)   rises by 15 percent.
C)   falls by less than 15 percent.
D)   rises by less than 15 percent.
E)   falls by more than 15 percent.

Question 6

How does the elasticity of demand affect the incidence of a tax?

Accepted Answer

For a given elasticity of supp...

Question 7

Tax incidence is the

Accepted Answer

A)   dollar amount of a tax, expressed as a percentage of the purchase price.
B)   dollar amount of a tax per unit sold.
C)   division of a tax burden between the buyer and seller.
D)   amount of revenue collected by government on a specific good.
E)   deadweight loss from the tax.

Question 8

The 2010 health care reform that expanded public health care coverage for low income individuals by increasing taxes on high income earners.Taking more tax revenue from high income earners reflects

Accepted Answer

A)   the benefits principle because high income earners can more easily bear the burden of taxes.
B)   the ability-to-pay principle because high income earners can more easily bear the burden of taxes.
C)   the ability-to-pay principle because high income earners use more public health care services.
D)   the benefits principle because high income earners use more public health care services.
E)   a regressive tax system since high income earners will pay a greater dollar amount in taxes.

Question 9

-The above figure shows the market for gourmet ice cream.In effort to reduce obesity,government places a $2 tax per gallon on suppliers in this market,shifting the supply curve from S? to S?.The tax incidence is

Accepted Answer

A)   split equally between consumers and producers, each paying $1 per gallon.
B)   split equally between consumers and producers, each paying $2 per gallon.
C)   such that consumers pay $2 per gallon and producers pay $1 per gallon.
D)   such that consumers pay $1 per gallon and producers pay $2 per gallon.
E)   such that producers pay all of the tax.

Question 10

For the United States,which tax is the single biggest source of tax revenue?

Accepted Answer

A)   Social Security tax
B)   sales tax
C)   property tax
D)   personal income tax
E)   corporation income tax

Question 11

Sellers bear the entire incidence of a tax on a good.This outcome can occur if

Accepted Answer

A)   supply is perfectly inelastic.
B)   the good is an inferior good.
C)   demand is perfectly inelastic.
D)   the demand curve is downward sloping and the supply curve is upward sloping.
E)   supply is perfectly elastic.

Question 12

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 tax

Question 13

Is the deadweight loss from a sales tax on a product larger the more inelastic the demand for the good?

Accepted Answer

No,the deadweight lo...

Question 14

Vertical equity implies that
i.tax rates should be equal for all tax payers.
ii.people with higher income should pay more in taxes.
iii.people with higher incomes should pay a lower average tax rate.

Accepted Answer

A)   i only
B)   ii only
C)   iii only
D)   i and ii
E)   ii and iii

Question 15

Which resource has the least elastic supply?

Accepted Answer

A)   labor
B)   capital
C)   land
D)   money
E)   taxes

Question 16

Suppose that the elasticity of demand for insulin is 0.1,the elasticity of demand for oranges is 1.2,and the elasticity of supply for insulin and oranges is 0.4.If the government imposes a 10 percent tax on both insulin and oranges,the decrease in the quantity of oranges is ________ the decrease in the quantity of insulin.

Accepted Answer

A)   larger than
B)   smaller than
C)   equals to
D)   not comparable to
E)   More information is needed to determine how the decrease in the quantity of oranges compares to the decrease in the quantity of insulin.

Question 17

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.

Question 18

The average tax rate

Accepted Answer

A)   can be calculated by summing all the marginal tax rates up to the level of income for which the average is being calculated.
B)   is the marginal tax rate divided by the total tax.
C)   is the percentage of income paid as taxes.
D)   equals income divided by amount of taxes paid.
E)   equals the marginal tax rate multiplied by total taxable income.

Question 19

What is the difference between vertical equity and horizontal equity?

Accepted Answer

Vertical equity is the requirement that ...

Question 20

Suppose that Anthony and Melissa both earn $30,000 and are otherwise the same.If they both pay 10 percent of their income as taxes,then

Accepted Answer

A)   the income tax is regressive.
B)   the benefits principle of fairness has been achieved.
C)   horizontal equity has been achieved.
D)   proportional equity has been achieved.
E)   vertical equity has been achieved.

Exam 8: Taxes

Tax incidence is the

Correct Answer
verified

If there is an income tax levied on labor income,the labor demand curve and the labor supply curve .

Correct Answer
verified

Suppose that Anthony and Melissa both earn $30,000 and are otherwise the same.If they both pay 10 percent of their income as taxes,then

Correct Answer
verified

Is the deadweight loss from a sales tax on a product larger the more inelastic the demand for the good?

Correct Answer
verified
No,the deadweight lo...
View Answer

For the United States,which tax is the single biggest source of tax revenue?

Correct Answer
verified

The average tax rate

Correct Answer
verified

-The above figure shows the market for gourmet ice cream.In effort to reduce obesity,government places a $2 tax per gallon on suppliers in this market,shifting the supply curve from S? to S?.The tax incidence is

Correct Answer
verified

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

Correct Answer
verified

For 2011,the federal government reduced the Social Security tax on workers by 2 percentage points.This will likely cause

Correct Answer
verified

What is the difference between vertical equity and horizontal equity?

Correct Answer
verified
Vertical equity is the requirement that ...
View Answer

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

Correct Answer
verified

The 2010 health care reform that expanded public health care coverage for low income individuals by increasing taxes on high income earners.Taking more tax revenue from high income earners reflects

Correct Answer
verified

Correct Answer
verified

Suppose the elasticity of supply of land is 0 and elasticity of demand is 2.If the government imposes a 10 percent tax on land,then

Correct Answer
verified

Which resource has the least elastic supply?

Correct Answer
verified

How does the elasticity of demand affect the incidence of a tax?

Correct Answer
verified
For a given elasticity of supp...
View Answer

Because the supply of capital is highly elastic,taxing the income from capital results in i.firms that demand capital paying the greater share of the tax. ii.a decrease in the equilibrium quantity of capital. iii.a deadweight loss.

Correct Answer
verified

Vertical equity implies that i.tax rates should be equal for all tax payers. ii.people with higher income should pay more in taxes. iii.people with higher incomes should pay a lower average tax rate.

Correct Answer
verified

Sellers bear the entire incidence of a tax on a good.This outcome can occur if

Correct Answer
verified

Giving in to the demand of protestors,suppose the French government reduces the tax on gasoline by 15 percent.Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic.As a result of the tax cut,the price for a gallon of gasoline paid by buyers

Correct Answer
verified

Exam 8: Taxes

Tax incidence is the

Correct AnswerverifiedShow Answer

If there is an income tax levied on labor income,the labor demand curve ________ and the labor supply curve ________.

Correct AnswerverifiedShow Answer

Suppose that Anthony and Melissa both earn $30,000 and are otherwise the same.If they both pay 10 percent of their income as taxes,then

Correct AnswerverifiedShow Answer

Is the deadweight loss from a sales tax on a product larger the more inelastic the demand for the good?

Correct AnswerverifiedNo,the deadweight lo...View AnswerShow Answer

For the United States,which tax is the single biggest source of tax revenue?

Correct AnswerverifiedShow Answer

The average tax rate

Correct AnswerverifiedShow Answer

-The above figure shows the market for gourmet ice cream.In effort to reduce obesity,government places a $2 tax per gallon on suppliers in this market,shifting the supply curve from S? to S?.The tax incidence is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For 2011,the federal government reduced the Social Security tax on workers by 2 percentage points.This will likely cause

Correct AnswerverifiedShow Answer

What is the difference between vertical equity and horizontal equity?

Correct AnswerverifiedVertical equity is the requirement that ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The 2010 health care reform that expanded public health care coverage for low income individuals by increasing taxes on high income earners.Taking more tax revenue from high income earners reflects

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose the elasticity of supply of land is 0 and elasticity of demand is 2.If the government imposes a 10 percent tax on land,then

Correct AnswerverifiedShow Answer

Which resource has the least elastic supply?

Correct AnswerverifiedShow Answer

How does the elasticity of demand affect the incidence of a tax?

Correct AnswerverifiedFor a given elasticity of supp...View AnswerShow Answer

Because the supply of capital is highly elastic,taxing the income from capital results in i.firms that demand capital paying the greater share of the tax. ii.a decrease in the equilibrium quantity of capital. iii.a deadweight loss.

Correct AnswerverifiedShow Answer

Vertical equity implies that i.tax rates should be equal for all tax payers. ii.people with higher income should pay more in taxes. iii.people with higher incomes should pay a lower average tax rate.

Correct AnswerverifiedShow Answer

Sellers bear the entire incidence of a tax on a good.This outcome can occur if

Correct AnswerverifiedShow Answer

Giving in to the demand of protestors,suppose the French government reduces the tax on gasoline by 15 percent.Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic.As a result of the tax cut,the price for a gallon of gasoline paid by buyers

Correct AnswerverifiedShow Answer

Correct Answer
verified

If there is an income tax levied on labor income,the labor demand curve and the labor supply curve .

Correct Answer
verified

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No,the deadweight lo...
View Answer

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Vertical equity is the requirement that ...
View Answer

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For a given elasticity of supp...
View Answer

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