Question 1

A tax system _____ when taxes are distributed fairly.

Accepted Answer

A)   is efficient
B)   is equitable
C)   has no deadweight loss
D)   is in equilibriumE) All of the above
F) C) and D)

Question 2

Use the following to answer questions :  Scenario: The Market for Good X:\text {Scenario: The Market for Good X:}Scenario: The Market for Good X: 
 \text {The market for good \mathrm { X } can be depicted with the following demand and supply equations:} 
 Demand: P = 50 - Q / 2\text {Demand: P = 50 - Q / 2}Demand: P = 50 - Q / 2 
 Supply: P = Q / 3\text {Supply: P = Q / 3}Supply: P = Q / 3 
 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.\text {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.}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) Use Scenario: The Market for Good X.The per-unit tax incidence on producers is equal to (round all calculations to two decimal places) :

Accepted Answer

A)   $1.00.
B)   $0.40.
C)   $58.80.
D)   $60.00. E) None of the above
F) B) and D)

Question 3

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

Accepted Answer

A)   more;smaller
B)   more;larger
C)   less;smaller
D)   less;largerE) A) and C)
F) A) and B)

Question 4

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

Accepted Answer

A)   ability-to-pay
B)   tax fairness
C)   benefits
D)   affordabilityE) B) and D)
F) A) and B)

Question 5

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

Accepted Answer

A)   ability-to-pay
B)   proportional tax
C)   lump-sum tax
D)   benefits receivedE) All of the above
F) B) and C)

Question 6

Since the terrorist attacks of 9/11 (on the World Trade Centre,in New York City) ,many federal airline regulatory bodies have added a small security fee to every airplane ticket purchased.This is an example of:

Accepted Answer

A)   the benefits principle of tax fairness.
B)   a lump-sum tax.
C)   the ability-to-pay principle of tax fairness.
D)   a profits tax.E) A) and C)
F) B) and D)

Question 7

Which tax is the LARGEST source of federal government revenue?

Accepted Answer

A)   sales
B)   property
C)   individual income
D)   deathE) B) and C)
F) A) and C)

Question 8

Because of tax competition,provincial and municipal taxes tend to be _____;however,federal taxes tend to be _____.

Accepted Answer

A)   regressive;regressive
B)   progressive;regressive
C)   progressive;progressive
D)   regressive;progressiveE) A) and D)
F) C) and D)

Question 9

The deadweight loss from an excise tax comes about because:

Accepted Answer

A)   the number of transactions in the market is smaller than the no-tax equilibrium.
B)   some mutually beneficial transactions do not take place.
C)   a quota rent exists.
D)   the number of transactions in the market is reduced and some mutually beneficial transactions do not take place.E) B) and D)
F) A) and D)

Question 10

A tax system achieves equity when:

Accepted Answer

A)   taxes are distributed fairly,however society may define fair.
B)   it minimizes the costs to the economy of tax collection.
C)   it is efficient.
D)   taxes are lump sum.E) All of the above
F) B) and C)

Question 11

Which tax BEST illustrates the ability-to-pay principle of tax fairness?

Accepted Answer

A)   The municipal playground is funded by a tax on all citizens.
B)   Roads and highways are built and maintained by revenue from a tax on gasoline.
C)   A property tax that is proportional to the value of the home is charged to homeowners to fund primary and secondary education.
D)   A sales tax on food pays for police and fire protection.E) B) and C)
F) C) and D)

Question 12

A tax system achieves efficiency when:

Accepted Answer

A)   the right people actually bear the burden of taxes.
B)   it minimizes the costs to the economy of tax collection.
C)   the tax is fair.
D)   it is in equilibrium.E) A) and C)
F) A) and B)

Question 13

The benefits principle of taxation means individuals pay according to:

Accepted Answer

A)   whether and how much they use a good or service.
B)   benefits gained by society as a whole.
C)   benefits to government from having taxpayers.
D)   ability to pay.E) A) and B)
F) All of the above

Question 14

Use the following to answer questions : 
-(Figure: The Market for SUVs) Use Figure: The Market for SUVs.A price _____ of _____ will bring the about the same price and output in the market for SUVs as would an excise tax of $60 000.

Accepted Answer

A)   ceiling;$80 000
B)   ceiling;$100 000
C)   floor;$100 000
D)   floor;$160 000E) A) and C)
F) B) and C)

Question 15

Use the following to answer questions :
Figure: The Market for Melons in Russia II 
-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) A) and C)
F) None of the above

Question 16

Which situation demonstrates the benefits principle?

Accepted Answer

A)   Employed workers pay taxes that are used to fund technical training programs.
B)   Revenue from the federal tax on gasoline is used to maintain and improve highway infrastructure.
C)   Most of the revenue from property taxes is used to fund public schools.The taxes are paid by all homeowners.
D)   Taxes on cigarettes are used to pay provincial employees' salaries.E) A) and B)
F) A) and C)

Question 17

A _____ tax takes a fixed percentage of income,regardless of the level of income.

Accepted Answer

A)   proportional
B)   benefits
C)   progressive
D)   regressiveE) A) and B)
F) B) and D)

Question 18

Use the following to answer questions :
Figure: The Shrimp Market 
-(Figure: The Shrimp Market) Use Figure: The Shrimp Market.If the government wants to limit shrimp sales to 500 kilograms,it can impose a _____ excise tax on sellers,and the total tax revenue generated will be _____.

Accepted Answer

A)   $5;$2 500
B)   $7.50;$7 500
C)   $10;$2 500
D)   The answer cannot be determined from the information provided.E) A) and D)
F) All of the above

Question 19

If a tax system is poorly designed,it may be possible to increase:

Accepted Answer

A)   efficiency without sacrificing equity.
B)   equity while causing inefficiency.
C)   efficiency by sacrificing equity.
D)   equity without causing inefficiency or increase efficiency without sacrificing equity.E) All of the above
F) A) and B)

Question 20

To minimize deadweight loss,excise taxes should be levied on goods with inelastic demand and inelastic supply rather than goods with elastic demand and elastic supply.

Accepted Answer

A) True 
 B)False

Exam 7: Taxes

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

Correct Answer
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If a tax system is poorly designed,it may be possible to increase:

Correct Answer
verified

A tax system _____ when taxes are distributed fairly.

Correct Answer
verified

Which tax BEST illustrates the ability-to-pay principle of tax fairness?

Correct Answer
verified

Which situation demonstrates the benefits principle?

Correct Answer
verified

Since the terrorist attacks of 9/11 (on the World Trade Centre,in New York City) ,many federal airline regulatory bodies have added a small security fee to every airplane ticket purchased.This is an example of:

Correct Answer
verified

The benefits principle of taxation means individuals pay according to:

Correct Answer
verified

A _____ tax takes a fixed percentage of income,regardless of the level of income.

Correct Answer
verified

The deadweight loss from an excise tax comes about because:

Correct Answer
verified

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

Correct Answer
verified

Use the following to answer questions : Figure: The Market for Melons in Russia II -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: The Shrimp Market -(Figure: The Shrimp Market) Use Figure: The Shrimp Market.If the government wants to limit shrimp sales to 500 kilograms,it can impose a _ excise tax on sellers,and the total tax revenue generated will be _.

Correct Answer
verified

A tax system achieves equity when:

Correct Answer
verified

Because of tax competition,provincial and municipal taxes tend to be _;however,federal taxes tend to be _.

Correct Answer
verified

Which tax is the LARGEST source of federal government revenue?

Correct Answer
verified

Use the following to answer questions : -(Figure: The Market for SUVs) Use Figure: The Market for SUVs.A price _ of _ will bring the about the same price and output in the market for SUVs as would an excise tax of $60 000.

Correct Answer
verified

Correct Answer
verified

To minimize deadweight loss,excise taxes should be levied on goods with inelastic demand and inelastic supply rather than goods with elastic demand and elastic supply.

Correct Answer
verified

A tax system achieves efficiency when:

Correct Answer
verified

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

Correct Answer
verified

Exam 7: Taxes

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

Correct AnswerverifiedShow Answer

If a tax system is poorly designed,it may be possible to increase:

Correct AnswerverifiedShow Answer

A tax system _____ when taxes are distributed fairly.

Correct AnswerverifiedShow Answer

Which tax BEST illustrates the ability-to-pay principle of tax fairness?

Correct AnswerverifiedShow Answer

Which situation demonstrates the benefits principle?

Correct AnswerverifiedShow Answer

Since the terrorist attacks of 9/11 (on the World Trade Centre,in New York City) ,many federal airline regulatory bodies have added a small security fee to every airplane ticket purchased.This is an example of:

Correct AnswerverifiedShow Answer

The benefits principle of taxation means individuals pay according to:

Correct AnswerverifiedShow Answer

A _____ tax takes a fixed percentage of income,regardless of the level of income.

Correct AnswerverifiedShow Answer

The deadweight loss from an excise tax comes about because:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Use the following to answer questions : Figure: The Market for Melons in Russia II -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: The Shrimp Market -(Figure: The Shrimp Market) Use Figure: The Shrimp Market.If the government wants to limit shrimp sales to 500 kilograms,it can impose a _____ excise tax on sellers,and the total tax revenue generated will be _____.

Correct AnswerverifiedShow Answer

A tax system achieves equity when:

Correct AnswerverifiedShow Answer

Because of tax competition,provincial and municipal taxes tend to be _____;however,federal taxes tend to be _____.

Correct AnswerverifiedShow Answer

Which tax is the LARGEST source of federal government revenue?

Correct AnswerverifiedShow Answer

Use the following to answer questions : -(Figure: The Market for SUVs) Use Figure: The Market for SUVs.A price _____ of _____ will bring the about the same price and output in the market for SUVs as would an excise tax of $60 000.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

To minimize deadweight loss,excise taxes should be levied on goods with inelastic demand and inelastic supply rather than goods with elastic demand and elastic supply.

Correct AnswerverifiedShow Answer

A tax system achieves efficiency when:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow 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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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Use the following to answer questions : Figure: The Shrimp Market -(Figure: The Shrimp Market) Use Figure: The Shrimp Market.If the government wants to limit shrimp sales to 500 kilograms,it can impose a _ excise tax on sellers,and the total tax revenue generated will be _.

Correct Answer
verified

Correct Answer
verified

Because of tax competition,provincial and municipal taxes tend to be _;however,federal taxes tend to be _.

Correct Answer
verified

Correct Answer
verified

Use the following to answer questions : -(Figure: The Market for SUVs) Use Figure: The Market for SUVs.A price _ of _ will bring the about the same price and output in the market for SUVs as would an excise tax of $60 000.

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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