Question 1

Tax structure refers to what a tax is levied on (e.g., income, property, profits), and tax base refers to the base (or lowest) rate of taxation on a particular tax structure.

Accepted Answer

A) True 
 B)False

Question 2

If an excise tax is imposed on wine and collected from the consumers, the _____ curve will shift _____ by the amount of the tax.

Accepted Answer

A)   demand; upward
B)   demand; downward
C)   supply; upward
D)   supply; downwardE) B) and C)
F) None of the above

Question 3

Use the following to answer questions:
Figure: Tax Incidence 
-(Figure: Tax Incidence)  Look at the figure Tax Incidence. All other things unchanged, when a good or service is characterized by a relatively inelastic supply, as shown in panel _____, a greater share of the burden of an excise tax is borne by _____.

Accepted Answer

A)   A; buyers
B)   B; sellers
C)   A; sellers
D)   B; buyersE) None of the above
F) C) and D)

Question 4

Use the following to answer questions:
Figure: A Market with a Tax 
-(Figure: A Market with a Tax)  Look at the figure A Market with a Tax. Before the tax, producer surplus is equal to the areas:

Accepted Answer

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

Question 5

When workers earn income, they and their employer pay equal portions of FICA (the Federal Insurance Contributions Act) . Which of the following statements is TRUE?

Accepted Answer

A)   The worker and the employer each bear half of the burden (incidence)  of the tax.
B)   The employer bears almost all of the burden of the tax.
C)   The worker bears almost all of the burden of the tax.
D)   It's impossible to determine who bears the burden of the tax.E) A) and B)
F) B) and C)

Question 6

Taxation according to the ability-to-pay principle is best illustrated in the United States by _____ taxes.

Accepted Answer

A)   sales
B)   personal income
C)   excise
D)   gasolineE) B) and C)
F) None of the above

Question 7

Use the following to answer questions:
Figure: The Market for Lattes 
-(Figure: The Market for Lattes)  Look at the figure The Market for Lattes. If the government assesses a tax of $0.75 on each latte, the price the consumer pays for a latte after the tax will:

Accepted Answer

A)   increase from $2 to $2.75.
B)   increase from $2 to $2.50.
C)   increase from $2 to $2.25.
D)   change, but we cannot determine by how much.E) B) and D)
F) None of the above

Question 8

The percentage of an INCREASE in a taxpayer's income that is taxed away is the _____ tax rate.

Accepted Answer

A)   marginal
B)   average
C)   total
D)   lowerE) All of the above
F) A) and B)

Question 9

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 _____.

Accepted Answer

A)   C; D
B)   C; A
C)   D; A
D)   B; AE) A) and B)
F) A) and C)

Question 10

Demand for Gala apples is relatively elastic compared to the supply of Gala apples, so if a tax is imposed on the consumers of Gala apples, the tax incidence:

Accepted Answer

A)   is typically on consumers more than producers.
B)   is typically on producers more than consumers.
C)   is typically split equally between consumers and producers.
D)   cannot be determined without more information.E) B) and D)
F) None of the above

Question 11

An excise tax causes a loss in efficiency because taxes distort incentives.

Accepted Answer

A) True 
 B)False

Question 12

Suppose price elasticity of demand is relatively inelastic for good X. If the price elasticity of supply for good X is elastic and an excise tax is imposed on good X, who will bear the greater burden of the tax?

Accepted Answer

A)   consumers
B)   producers
C)   both consumers and producers equally
D)   governmentE) All of the above
F) None of the above

Question 13

Paying a fee every time you use the municipal golf course is an example of the _____ principle.

Accepted Answer

A)   benefits
B)   ability-to-pay
C)   progressive tax
D)   regressive taxE) B) and D)
F) None of the above

Question 14

Use the following to answer questions:
Scenario: The Market for Good X:
The market for good X can be depicted with the following demand and supply equations:
Demand: P = 50 - 0.5Q
Supply: P = 0.33Q
where P is price per unit and Q represents quantity in units. Policy makers plan on imposing a $1 per unit tax on this good.
-(Scenario: The Market for Good X)  Look at the scenario The Market for Good X. The tax revenue collected by government from a $1 per unit tax will be:

Accepted Answer

A)   $1.00.
B)   $58.80.
C)   $60.00.
D)   $60.50.E) A) and B)
F) A) and C)

Question 15

What is the difference between a tax rate and a tax revenue?

Accepted Answer

The tax rate is the amount of tax per un...

Question 16

According to the benefits principle, which of the following is the BEST example of taxation?

Accepted Answer

A)   personal income tax
B)   sales tax
C)   corporate income tax
D)   gasoline taxE) All of the above
F) A) and B)

Question 17

Use the following to answer questions:
Figure: A Market with a Tax 
-(Figure: A Market with a Tax)  Look at the figure A Market with a Tax. Before the tax is imposed, consumer surplus is equal to the areas:

Accepted Answer

A)   A + B + C + D + E.
B)   A + B + C.
C)   A + B + C + D + E + F.
D)   D + E + F.E) None of the above
F) All of the above

Question 18

If the United States removed all excise taxes on cigarettes, which of the following would NOT occur?

Accepted Answer

A)   a decrease in producer surplus
B)   an increase in producer surplus
C)   an increase in consumer surplus
D)   an increase in total surplusE) B) and D)
F) All of the above

Question 19

Recently the government considered adding an excise tax on CDs that can be used to record music and CD players that can record discs. If this tax were enacted, the most likely effect would be:

Accepted Answer

A)   that consumers would pay a higher price and producers would sell fewer of these CDs and CD players than before the tax.
B)   no change in consumption or the prices paid by consumers of these CDs and CD players.
C)   that consumers would pay a lower price and producers would receive a higher price for these CDs and CD players than before the tax.
D)   an increase in economic activity due to the tax.E) B) and C)
F) None of the above

Question 20

Use the following to answer questions: 
-(Table: The Market for Fried Twinkies)  Look at the table The Market for Fried Twinkies. Of the $0.30 tax per fried Twinkie, consumers actually pay _____, while producers actually pay _____.

Accepted Answer

A)   $0.30; $0.00
B)   $0.15; $0.15
C)   $0.20; $0.10
D)   $0.00; $0.30E) A) and B)
F) B) and C)

Exam 7: Taxes

Correct Answer
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Taxation according to the ability-to-pay principle is best illustrated in the United States by _____ taxes.

Correct Answer
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Use the following to answer questions: Figure: The Market for Lattes -(Figure: The Market for Lattes) Look at the figure The Market for Lattes. If the government assesses a tax of $0.75 on each latte, the price the consumer pays for a latte after the tax will:

Correct Answer
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If the United States removed all excise taxes on cigarettes, which of the following would NOT occur?

Correct Answer
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The percentage of an INCREASE in a taxpayer's income that is taxed away is the _____ tax rate.

Correct Answer
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If an excise tax is imposed on wine and collected from the consumers, the _ curve will shift _ by the amount of the tax.

Correct Answer
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Use the following to answer questions: -(Table: The Market for Fried Twinkies) Look at the table The Market for Fried Twinkies. Of the $0.30 tax per fried Twinkie, consumers actually pay _, while producers actually pay _.

Correct Answer
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Correct Answer
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When workers earn income, they and their employer pay equal portions of FICA (the Federal Insurance Contributions Act) . Which of the following statements is TRUE?

Correct Answer
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Use the following to answer questions: Figure: A Market with a Tax -(Figure: A Market with a Tax) Look at the figure A Market with a Tax. Before the tax is imposed, consumer surplus is equal to the areas:

Correct Answer
verified

What is the difference between a tax rate and a tax revenue?

Correct Answer
verified
The tax rate is the amount of tax per un...
View Answer

Tax structure refers to what a tax is levied on (e.g., income, property, profits), and tax base refers to the base (or lowest) rate of taxation on a particular tax structure.

Correct Answer
verified

According to the benefits principle, which of the following is the BEST example of taxation?

Correct Answer
verified

An excise tax causes a loss in efficiency because taxes distort incentives.

Correct Answer
verified

Paying a fee every time you use the municipal golf course is an example of the _____ principle.

Correct Answer
verified

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 _.

Correct Answer
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Suppose price elasticity of demand is relatively inelastic for good X. If the price elasticity of supply for good X is elastic and an excise tax is imposed on good X, who will bear the greater burden of the tax?

Correct Answer
verified

Demand for Gala apples is relatively elastic compared to the supply of Gala apples, so if a tax is imposed on the consumers of Gala apples, the tax incidence:

Correct Answer
verified

Recently the government considered adding an excise tax on CDs that can be used to record music and CD players that can record discs. If this tax were enacted, the most likely effect would be:

Correct Answer
verified

Use the following to answer questions: Figure: A Market with a Tax -(Figure: A Market with a Tax) Look at the figure A Market with a Tax. Before the tax, producer surplus is equal to the areas:

Correct Answer
verified

Exam 7: Taxes

Correct AnswerverifiedShow Answer

Taxation according to the ability-to-pay principle is best illustrated in the United States by _____ taxes.

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: The Market for Lattes -(Figure: The Market for Lattes) Look at the figure The Market for Lattes. If the government assesses a tax of $0.75 on each latte, the price the consumer pays for a latte after the tax will:

Correct AnswerverifiedShow Answer

If the United States removed all excise taxes on cigarettes, which of the following would NOT occur?

Correct AnswerverifiedShow Answer

The percentage of an INCREASE in a taxpayer's income that is taxed away is the _____ tax rate.

Correct AnswerverifiedShow Answer

If an excise tax is imposed on wine and collected from the consumers, the _____ curve will shift _____ by the amount of the tax.

Correct AnswerverifiedShow Answer

Use the following to answer questions: -(Table: The Market for Fried Twinkies) Look at the table The Market for Fried Twinkies. Of the $0.30 tax per fried Twinkie, consumers actually pay _____, while producers actually pay _____.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When workers earn income, they and their employer pay equal portions of FICA (the Federal Insurance Contributions Act) . Which of the following statements is TRUE?

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: A Market with a Tax -(Figure: A Market with a Tax) Look at the figure A Market with a Tax. Before the tax is imposed, consumer surplus is equal to the areas:

Correct AnswerverifiedShow Answer

What is the difference between a tax rate and a tax revenue?

Correct AnswerverifiedThe tax rate is the amount of tax per un...View AnswerShow Answer

Tax structure refers to what a tax is levied on (e.g., income, property, profits), and tax base refers to the base (or lowest) rate of taxation on a particular tax structure.

Correct AnswerverifiedShow Answer

According to the benefits principle, which of the following is the BEST example of taxation?

Correct AnswerverifiedShow Answer

An excise tax causes a loss in efficiency because taxes distort incentives.

Correct AnswerverifiedShow Answer

Paying a fee every time you use the municipal golf course is an example of the _____ principle.

Correct AnswerverifiedShow Answer

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 _____.

Correct AnswerverifiedShow Answer

Suppose price elasticity of demand is relatively inelastic for good X. If the price elasticity of supply for good X is elastic and an excise tax is imposed on good X, who will bear the greater burden of the tax?

Correct AnswerverifiedShow Answer

Demand for Gala apples is relatively elastic compared to the supply of Gala apples, so if a tax is imposed on the consumers of Gala apples, the tax incidence:

Correct AnswerverifiedShow Answer

Recently the government considered adding an excise tax on CDs that can be used to record music and CD players that can record discs. If this tax were enacted, the most likely effect would be:

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: A Market with a Tax -(Figure: A Market with a Tax) Look at the figure A Market with a Tax. Before the tax, producer surplus is equal to the areas:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

If an excise tax is imposed on wine and collected from the consumers, the _ curve will shift _ by the amount of the tax.

Correct Answer
verified

Use the following to answer questions: -(Table: The Market for Fried Twinkies) Look at the table The Market for Fried Twinkies. Of the $0.30 tax per fried Twinkie, consumers actually pay _, while producers actually pay _.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
The tax rate is the amount of tax per un...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

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 _.

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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