Quiz 7: Taxes

Suppose the government imposes a $10 excise tax on the sale of sweaters by charging suppliers $10 for each sweater sold.If the demand curve is downward-sloping and the supply curve is upward-sloping: A)the price of sweaters will increase by $10. B)consumers of sweaters will bear the entire burden of the tax. C)the price of sweaters will increase by less than $10. D)the price of sweaters will decrease by $10.

An excise tax that the government collects from the producers of a good: A)shifts the supply curve upward. B)reduces revenue for the government. C)has an effect similar to that of a tax subsidy. D)shifts the supply curve downward.

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: 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.

If an excise tax is imposed on automobiles and collected from consumers,the: A)demand curve will shift downward by the amount of the tax. B)supply curve will shift upward by the amount of the tax. C)equilibrium quantity supplied will increase relative to the pretax level. D)equilibrium quantity demanded will increase relative to the pretax level.

The incidence of a tax: A)is a measure of the revenue the government receives from it. B)refers to who writes the check to the government. C)refers to how much of the tax is actually paid by consumers and producers. D)is a measure of the deadweight loss from the tax.

Use the following to answer questions 6-9: -(Table: The Market for Fried Twinkies)Use Table: The Market for Fried Twinkies.The government decides to tax fried Twinkies at a rate of $0.30 per Twinkie and collect that tax from the producers.According to the table,consumers will pay _____ per Twinkie and buy _____ Twinkies after the tax. A)$1.20;8,000 B)$1.30;7,000 C)$1.40;6,000 D)$1.50;5,000

Use the following to answer questions 6-9: -(Table: The Market for Fried Twinkies)Use Table: The Market for Fried Twinkies.Of the $0.30 tax per fried Twinkie,consumers actually pay _____,while producers actually pay _____. A)$0.30;$0.00 B)$0.15;$0.15 C)$0.20;$0.10 D)$0.00;$0.30

Use the following to answer questions 6-9: -(Table: The Market for Fried Twinkies)Use Table: The Market for Fried Twinkies.The government decides to tax fried Twinkies at a rate of $0.30 per Twinkie and collect that tax from the producers.After paying the tax,producers will receive _____ per Twinkie,and they will sell _____ Twinkies after the tax. A)$1.10;3,000 B)$1.20;5,000 C)$1.30;7,000 D)$1.50;5,000

Use the following to answer questions 6-9: -(Table: The Market for Fried Twinkies)Use Table: The Market for Fried Twinkies.As a result of the $0.30 tax per fried Twinkie,the government will receive total tax revenue of: A)$500. B)$1,000. C)$1,500. D)The total is impossible to calculate.

Use the following to answer questions 6-9: -(Figure: An Excise Tax)Use Figure: An Excise Tax.If an excise tax equal to $1.10 is imposed on this good,then the price paid by consumers will: A)rise by $1.10. B)rise by $1.33. C)not rise. D)rise by $0.50.

The burden of a tax on a good is said to fall completely on the consumers if the: A)price paid by consumers for the good declines by the amount of the tax. B)price paid by consumers for the good increases by the amount of the tax. C)price paid by consumers does not change. D)wages received by workers who produce the good increase by the amount of the tax.

The burden of a tax on a good is said to fall completely on the producers if the: A)price paid by consumers for the good declines by the amount of the tax. B)price paid by consumers for the good increases by the amount of the tax. C)price paid by consumers does not change. D)wages received by workers who produce the good increase by the amount of the tax.

Use the following to answer questions 13-14: -(Figure: The Market for Productivity Apps)Use Figure: The Market for Productivity Apps.If the government imposes a tax of $1 in this market,consumers will pay _____ more per app and purchase _____ fewer apps. A)$1;5 B)$1;25 C)$0.50;5 D)$0.50;20

Use the following to answer questions 13-14: -(Figure: The Market for Productivity Apps)Use Figure: The Market for Productivity Apps.If the government imposes a tax of $1 in this market,producers will receive _____ less per app and sell _____ fewer apps. A)$1;5 B)$1;25 C)$0.50;5 D)$0.50;20

If an excise tax is imposed on wine and collected from the consumers,the _____ curve will shift _____ by the amount of the tax. A)demand;upward B)demand;downward C)supply;upward D)supply;downward

If an excise tax is imposed on beer and collected from the producers,the _____ curve will shift _____ by the amount of the tax. A)demand;upward B)demand;downward C)supply;upward D)supply;downward

Assuming a normal upward-sloping supply curve and downward-sloping demand curve,if the government imposes a $5 excise tax on leather shoes and collects the tax from the suppliers,the price of leather shoes will: A)increase by $5. B)increase by more than $5. C)increase by less than $5. D)increase,but we cannot determine by how much.

If the government imposes a $5 excise tax on leather shoes and the price of leather shoes increases by $2: A)the government will receive less tax revenue than anticipated. B)consumers are paying more of the tax than the producers. C)producers are paying more of the tax than are the consumers. D)the quantity of shoes sold will increase.

If the government imposes a $5 excise tax on leather shoes and the price of leather shoes does not change: A)the government will receive less tax revenue than anticipated. B)consumers are paying all of the tax. C)producers are paying all of the tax. D)consumers and producers are paying equal amounts of the tax.

State governments levy excise taxes on alcohol because: A)they want to subsidize alcohol production. B)they want to encourage individuals to produce their own alcohol. C)it discourages drinking alcohol while raising revenue for the government. D)it is politically popular with religious groups.

Tax incidence refers to: A)who writes the check to the government. B)who really pays the tax. C)the deadweight loss from the tax. D)the total revenue that the government collects from the tax.

An excise tax is levied on: A)each unit of a good or service that is sold. B)earnings. C)the ownership of real estate. D)the inheritance of assets.

Prior to any taxes,the equilibrium price of gasoline is $3 per gallon.Then a $1-per-gallon tax is levied.As a result,the price of gasoline rises to $3.75 per gallon.The incidence of the $1 tax is _____ paid by consumers and _____ paid by producers. A)$0.25;$0.75 B)$0.50;$0.50 C)$0;$1.00 D)$0.75;$0.25

Which tax is an excise tax? A)a tax of $0.41 per gallon of gas B)a tax of 12.4% of your wages C)a tax on the value of your property D)a one-time local per capita tax of $50

An excise tax is levied on suppliers.The incidence of the tax: A)is typically on the consumer more than the producer. B)is typically on the producer more than the consumer. C)is typically split equally between the producer and the consumer. D)cannot be determined without more information.

(Figure: The Market for Hotel Rooms)Use Figure: The Market for Hotel Rooms.Suppose with no tax the equilibrium price is $110 and the equilibrium quantity is 250.If the local government levies a tax of $30 per night on each hotel room rented,the new equilibrium price will equal _____ and the new equilibrium quantity will equal _____. A)$140;100 B)$130;150 C)$120;200 D)$110;250

Taxes on the purchase of specific items such as gasoline,cigarettes,or alcoholic beverages are called _____ taxes. A)personal income B)excise C)property D)sales

Determining who bears the burden of the tax is a question about: A)tax incidence. B)externality analysis. C)public interest theory. D)public choice theory.

Tax incidence analysis seeks to determine: A)who sends the tax payment to the government. B)who actually pays the tax. C)who ultimately gets the tax revenue. D)whether a tax is in the benefits-received category or the ability-to-pay category.

Determining who actually pays the cost imposed by a tax is the study of: A)public interest theory. B)rational choice theory. C)tax incidence. D)budget analysis.

The burden of a tax on a good falls at least partially on consumers if the: A)price paid by consumers for the good declines. B)price paid by consumers for the good increases. C)wages received by workers who produce the good decline. D)wages received by workers who produce the good increase.

Suppose the absolute value of the price elasticity of demand for yachts equals 4.04,while the price elasticity of supply for yachts equals 0.22.If Congress reinstates a luxury tax on yachts,who will pay more of the tax? A)Yacht builders will pay more. B)Yacht buyers will pay more. C)Yacht builders and buyers will pay equally. D)It's impossible to tell without additional information.

State governments levy excise taxes on cigarettes because: A)they want to subsidize tobacco farming. B)they want to discourage cigarette smuggling. C)it is an easy way to raise tax revenue while discouraging smoking. D)they want to minimize the tax burden on consumers.

Suppose the government levies a $4 per month excise tax on cable TV.If the demand for cable TV is relatively (but not perfectly)inelastic and the supply curve is relatively (but not perfectly)elastic,then the price of cable TV will: A)increase by more than $4. B)increase by exactly $4. C)increase by less than $4. D)remain constant.

Suppose the government imposes a $4 per month excise tax on cable TV.If the demand for cable TV is perfectly inelastic and the supply curve is elastic (but not perfectly elastic),then the price of cable TV will: A)increase by more than $4. B)increase by exactly $4. C)increase by less than $4. D)remain constant.

If the demand curve is downward-sloping and supply is perfectly elastic,then the burden of an excise tax is: A)borne entirely by consumers. B)borne entirely by producers. C)shared by consumers and producers,with the burden falling mainly on consumers. D)shared by consumers and producers,with the burden falling mainly on producers.

If demand is perfectly inelastic and the supply curve is upward-sloping,then the burden of an excise tax is: A)borne entirely by consumers. B)borne entirely by producers. C)shared by consumers and producers,with the burden falling mainly on consumers. D)shared by consumers and producers,with the burden falling mainly on producers.

As part of an anti-obesity program,the government levies an excise tax on high-fat foods.We expect consumers to pay almost all of this tax if demand is _____ and supply is _____. A)inelastic;inelastic B)inelastic;elastic C)elastic;elastic D)elastic;inelastic

Suppose the government imposes a $10 per month tax on cell phone service.If the demand curve for cell phone service is perfectly inelastic and the supply curve is upward-sloping,the monthly price for cell phone service will increase by: A)$5. B)less than $10. C)$10. D)$0.

Suppose the government imposes a $9 per month tax on cell phone service.If the demand curve for cell phone service is perfectly elastic and the supply curve is upward-sloping,the monthly price for cell phone service will: A)increase by $4.50. B)increase by more than $9. C)increase by $9. D)not change.

The price elasticity of demand for a particular cancer drug is zero and the price elasticity of supply is 0.50.If a $1 excise tax is levied on producers,how much of this tax will eventually be paid by consumers? A)$0 B)$1 C)$0.50 D)$1.50

The demand for food is very inelastic compared to the supply of food,so if a tax is imposed on the consumers of food,the tax incidence: 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.

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: 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.

Economic analysis shows that workers pay _____ of the FICA. A)exactly half B)very little C)most D)none

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

By law,FICA (the Federal Insurance Contributions Act),a payroll tax,is collected equally from employers and employees.In reality: A)the law works since the employers and the employees each bear half of the burden of the tax. B)the employees bear almost all of the burden of the tax. C)the employers bear almost all of the burden of the tax. D)it's impossible to determine who bears the burden of the tax.

Use the following to answer questions 47-48: -(Figure: The Shrimp Market)Use Figure: The Shrimp Market.If the government wants to limit shrimp sales to 500 pounds,it can impose a _____ excise tax on sellers,and the total tax revenue generated will be _____. A)$5;$2,500 B)$7.50;$7,500 C)$10;$2,500 D)The answer cannot be determined from the information provided.

Use the following to answer questions 47-48: -(Figure: The Shrimp Market)Use Figure: The Shrimp Market.If the government wants to limit shrimp sales to 250 pounds,it can impose a _____ excise tax on sellers,and the total tax revenue generated will be _____. A)$5;$2,500 B)$7.50;$7,500 C)$10;$2,500 D)The answer cannot be determined from the information provided.

A higher tax rate is more likely to increase tax revenue if the price elasticity of demand is _____ and the price elasticity of supply is _____. A)high;high B)low;low C)low;high D)high;low

The amount of tax levied per unit of good or service is called the tax: A)incidence. B)rate. C)revenue. D)surplus.

A higher rate is MOST likely to decrease the amount of revenue that the government collects from an excise tax if demand is _____ and supply is _____. A)elastic;elastic B)elastic;inelastic C)inelastic;elastic D)inelastic;inelastic

If demand and supply are both very inelastic,a decrease in the rate of an excise tax will likely: A)decrease government revenue. B)increase government revenue. C)not affect government revenue. D)make demand and supply both elastic.

If demand and supply are both very elastic,a decrease in the rate of an excise tax will likely: A)decrease government revenue. B)increase government revenue. C)not affect government revenue. D)make demand and supply both inelastic.

If the elasticity of demand is _____ and the elasticity of supply is _____,tax revenue is likely to decrease if the tax rate is increased. A)3.3;2.1 B)3.3;0.5 C)0.2;2.1 D)0.2;0.5

If the elasticity of demand is _____ and the elasticity of supply is _____,tax revenue is likely to increase if the tax rate is increased. A)3.3;2.1 B)3.3;0.5 C)0.2;2.1 D)0.2;0.5

If the United States removed all excise taxes on cigarettes,which effect would NOT occur? A)a decrease in producer surplus B)an increase in producer surplus C)an increase in consumer surplus D)an increase in total surplus

When the government imposes an excise tax in a market with a downward-sloping demand curve and an upward-sloping supply curve: A)consumer surplus falls. B)producer surplus falls. C)a deadweight loss occurs. D)consumer surplus falls,producer surplus falls,and a deadweight loss occurs.

If the government removed the excise tax on gasoline,assuming that neither demand nor supply is perfectly inelastic,which effect would NOT occur? A)an increase in consumer surplus B)an increase in producer surplus C)a decrease in producer surplus D)an increase in total surplus

The deadweight loss from an excise tax comes about because: 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.

An excise tax causes inefficiency if the number of transactions in a market is reduced as a result of the tax.Because the tax discourages mutually beneficial transactions,there is a(n)_____ from a tax. A)quota rent B)deadweight loss C)increased consumer surplus D)increased producer surplus

A tax leads to a(n)_____ in consumer surplus and a(n)_____ in producer surplus. A)increase;increase B)increase;decrease C)decrease;increase D)decrease;decrease

The burden of a tax system comes from its: A)effect on elasticity. B)effect on marginal incentives. C)inequity. D)government revenue.

Assume the same upward supply curve for each of the following goods.Considering demand only,a tax on _____ would result in the LARGEST deadweight loss. A)gasoline B)medicine C)restaurant meals D)tobacco

If the government decides to impose a $700 tax on U.S.citizens vacationing abroad,then the deadweight loss from this tax will be: A)relatively small. B)relatively large. C)zero. D)absorbed by foreign governments.

The number of seats in a football stadium is fixed at 70,000.The city decides to impose a tax of $10 per ticket.In response,the team management raises the ticket price from $30 to $40 and still sells all 70,000 tickets.The tax caused a change in the consumer surplus of _____,a change in the producer surplus of _____,and a deadweight loss of _____. A)-$10;$0;$10 B)-$700,000;$0;$700,000 C)-$10;$0;$0 D)-$700,000;$0;$0

Excise taxes that raise the MOST revenue and cause the LEAST deadweight loss are likely to be levied on goods for which demand is _____ and supply is _____. A)inelastic;elastic B)inelastic;inelastic C)elastic;inelastic D)elastic;elastic

The governor wants to levy a $1 excise tax on a product but wants to minimize the deadweight loss.The deadweight loss will be LEAST when the demand curve is _____ and the supply curve is _____. A)elastic;elastic B)elastic;inelastic C)inelastic;elastic D)inelastic;inelastic

If the demand for luxury yachts is very elastic,then a yacht tax would lead to: A)a large deadweight loss. B)no deadweight loss. C)a small deadweight loss. D)a large amount of tax revenue but no deadweight loss.

If demand is downward-sloping and supply is upward-sloping,which statement about the effects of an excise tax is INCORRECT? A)The lower the elasticity of supply relative to the elasticity of demand,the lower the burden of the tax borne by suppliers. B)An excise tax causes a deadweight loss because consumer and producer surpluses are reduced by more than the revenue the government collects. C)An excise tax drives a wedge between the price paid by consumers and the price received by producers. D)An excise tax is inefficient because it distorts incentives at the margin for both consumers and producers.

If the government wants to minimize the deadweight loss from taxes,it should tax goods for which the: A)price elasticity of demand is high. B)price elasticity of demand is low. C)price elasticity of supply is high. D)demand is high.

If the government levies an excise tax in a market whose demand curve is perfectly inelastic,the burden of the tax will fall completely on the _____,and the deadweight loss will equal _____. A)consumers;zero B)producers;zero C)consumers;the tax revenue D)producers;the tax revenue

If the government levies an excise tax in a market whose supply curve is perfectly inelastic,the burden of the tax will fall completely on the _____,and the deadweight loss will equal _____. A)consumers;zero B)producers;zero C)consumers;the tax revenue D)producers;the tax revenue

If you want to reduce the inefficiency costs of taxation,you should devise taxes to fall on goods for which the supply is _____ and the demand is _____. A)elastic;elastic B)inelastic;inelastic C)elastic;inelastic D)inelastic;elastic

If the main purpose of a tax is to decrease the amount of a harmful activity,such as underage drinking,the government should impose it on harmful activities whose supply is _____ and demand is _____. A)elastic;elastic B)inelastic;inelastic C)elastic;inelastic D)inelastic;elastic

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

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

Given any upward-sloping supply curve for a good,the more elastic the demand 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

Given any upward-sloping supply curve for a good,the more inelastic the demand 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

An analysis of the effect of excise taxes on markets allows us to conclude that: A)when the price elasticity of supply is equal to zero,an excise tax falls entirely on the consumers. B)when the price elasticity of demand is lower than the price elasticity of supply,an excise tax falls mainly on the producers. C)whether the tax is levied on consumers or producers,the quantity sold will be the same. D)when the price elasticity of demand is higher than the price elasticity of supply,an excise tax falls mainly on the consumers.

The deadweight loss from an excise tax is largest if demand is _____ and supply is _____. A)elastic;inelastic B)inelastic;elastic C)inelastic;inelastic D)elastic;elastic

If the demand for good X is perfectly inelastic and a tax is levied on the producers of each unit: A)consumers pay the entire tax,and deadweight loss will occur because the equilibrium quantity of good X falls. B)consumers pay the entire tax,and there is no deadweight loss because the equilibrium quantity of good X remains constant. C)consumers and producers share the burden of the tax,and there is no deadweight loss because the equilibrium quantity of good X remains constant. D)producers pay the entire tax,and deadweight loss will occur because the equilibrium quantity of good X falls.

To minimize deadweight loss,markets where demand is relatively _____ and supply is relatively _____ should be taxed. A)elastic;inelastic B)elastic;elastic C)inelastic;elastic D)inelastic;inelastic

If demand is inelastic,then deadweight loss will: A)be minimized if supply is also inelastic. B)be maximized if supply is also inelastic. C)decrease if demand becomes more elastic. D)increase if supply becomes more inelastic.

Use the following to answer questions 84-86: -(Figure and Table: The Market for Taxi Rides)Use Figure and Table: The Market for Taxi Rides.If the government imposes an excise tax of $1 per ride (causing the supply curve to shift upward by that amount),then the government will collect tax revenues of _____.However,the tax will cause a _____ deadweight loss to society. A)$9 million;$0.5 million B)$16 million;$1 million C)$45 million;$1 million D)$50 million;$0.5 million

Use the following to answer questions 84-86: -(Figure and Table: The Market for Taxi Rides)Use Figure and Table: The Market for Taxi Rides.The figure represents a competitive market for taxi rides.If the government imposes an excise tax of $2 per ride (causing the supply curve to shift upward by that amount),then the government will collect tax revenues of _____,BUT the tax will cause a _____ deadweight loss to society. A)$8 million;$1 million B)$16 million;$2 million C)$24 million;$4.5 million D)$48 million;$6 million

Use the following to answer questions 84-86: -(Figure and Table: The Market for Taxi Rides)Use Figure and Table: The Market for Taxi Rides.If the government imposes an excise tax of $1 per ride (causing the supply curve to shift upward by that amount),then people who ride taxis will pay _____ of each $1 tax. A)$1 B)$0.50 C)$0.25 D)$0.00

Use the following to answer questions 87-90: -(Figure: The Market for Hamburgers)Use Figure: The Market for Hamburgers.If the market is originally in equilibrium and the government imposes an excise tax of $0.80 per unit of the good sold,consumer surplus will be reduced by: A)$175. B)$240. C)$105. D)$90.

Use the following to answer questions 87-90: -(Figure: The Market for Hamburgers)Use Figure: The Market for Hamburgers.If the market is originally in equilibrium and the government imposes an excise tax of $0.80 per hamburger,producer surplus will be reduced by: A)$175. B)$240. C)$105. D)$90.

Use the following to answer questions 87-90: -(Figure: The Market for Hamburgers)Use Figure: The Market for Hamburgers.If the market is originally in equilibrium and the government imposes an excise tax of $0.80 per unit of the good sold,the deadweight loss associated with the tax will be: A)$40. B)$240. C)$105. D)$90.

Use the following to answer questions 87-90: -(Figure: The Market for Hamburgers)Use Figure: The Market for Hamburgers.If the market is originally in equilibrium and the government imposes an excise tax of $0.80 per unit of the good sold,the government's revenue from the tax will be: A)$175. B)$240. C)$105. D)$90.

Use the following to answer questions 87-90: -When the government imposes an excise tax,the deadweight loss is caused by: A)equal the tax revenue paid to the government. B)be greater than the tax revenue paid to the government. C)be less than the tax revenue paid to the government. D)prevention of transactions because of the cost of the tax.

Use the following to answer questions 87-90: -(Figure: The Market for Music Downloads)Use Figure: The Market for Music Downloads.If the government imposes a tax of $3 in this market,the government will receive tax revenue of: A)$20. B)$30. C)$60. D)$75.

Use the following to answer questions 87-90: -(Figure: The Market for Music Downloads)Use Figure: The Market for Music Downloads.If the government imposes a tax of $3 in this market,the deadweight loss will equal: A)$0. B)$22.50. C)$26.25. D)$52.50.

Use the following to answer questions 87-90: -A tax: A)generates tax revenue and causes deadweight loss. B)increases consumer and producer surplus. C)produces revenue for the government and increases total surplus. D)is always efficient.

Use the following to answer questions 95-101: -(Figure: The Market for Blue Jeans)Use Figure: The Market for Blue Jeans.The government recently levied a $10 tax on the producers of blue jeans.What area or areas in the graph identify tax revenue? A)a + b + c B)b + d C)c + e D)d + e + f

Use the following to answer questions 95-101: -(Figure: The Market for Blue Jeans)Use Figure: The Market for Blue Jeans.The government recently levied a $10 tax on the producers of blue jeans.What area or areas in the graph identify consumer and producer surplus after the tax was levied? A)a + b + c B)a + b + c + d + e + f C)d + e + f D)a + f

Use the following to answer questions 95-101: -(Figure: The Market for Blue Jeans)Use Figure: The Market for Blue Jeans.The government recently levied a $10 tax on the producers of blue jeans.What area or areas in the graph identify deadweight loss? A)a + b + c B)b + d C)c + e D)d + e + f

Use the following to answer questions 95-101: -(Figure: The Market for Blue Jeans)Use Figure: The Market for Blue Jeans.The government recently levied a $10 tax on the producers of blue jeans.What area or areas in the graph identify the loss of consumer surplus due to the tax? A)c B)b + c C)b D)a + b + c

Use the following to answer questions 95-101: -(Figure: The Market for Blue Jeans)Use Figure: The Market for Blue Jeans.The government recently levied a $10 tax on the producers of blue jeans.What area or areas in the graph identify the loss of producer surplus due to the tax? A)d + e B)e C)d D)d + e + f

Use the following to answer questions 95-101: -(Figure: The Market for Blue Jeans)Use Figure: The Market for Blue Jeans.The government recently levied a $10 tax on the producers of blue jeans.What is the deadweight loss? A)$1,000 B)$500 C)$250 D)$1,250

Use the following to answer questions 95-101: -(Figure: The Market for Blue Jeans)Use Figure: The Market for Blue Jeans.The government recently levied a $10 tax on the producers of blue jeans.What is the tax revenue? A)$1,000 B)$500 C)$4,000 D)$5,000

The two principles of tax fairness are: A)the minimize-distortions principle and the maximize-revenue principle. B)the benefits principle and the ability-to-pay principle. C)the proportional-tax principle and the ability-to-pay principle. D)the equity principle and the efficiency principle.

The ability-to-pay principle says that: A)the amount of tax paid depends on the measure of value. B)those who benefit from public spending should bear the burden of the tax that pays for that spending. C)those with greater ability to pay should pay more tax. D)those who benefit from the tax should pay the same percentage of the tax base as those who do not benefit.

A lump-sum tax,such as the fee for a driver's license,does not take into consideration: A)efficiency. B)the benefits principle. C)the ability-to-pay principle. D)the tax base.

Which situation demonstrates the benefits principle? 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 the interstate highway system. 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 state employees' salaries.

The benefits principle says that: A)the amount of tax paid depends on the measure of value. B)those who benefit from public spending should bear the burden of the tax that pays for that spending. C)those with greater ability to pay should pay more tax. D)those who benefit from the tax should pay the same percentage of the tax base as those who do not benefit.

Which tax reflects the ability-to-pay principle? A)the federal income tax B)the payroll tax C)a sales tax on food D)Social Security tax

Criteria that economists use in selecting a tax system include: A)the ability to pay. B)employment status. C)consumer debt. D)the maximal deadweight loss.

The _____ principle implies that people with _____ should pay more taxes. A)ability-to-pay;greater benefits received B)benefits;higher incomes C)ability-to-pay;higher incomes D)benefits;fewer benefits

A principle suggesting that people with more income or wealth should pay more taxes is the _____ principle. A)ability-to-pay B)regressive tax C)progressive tax D)benefits

Taxation according to the benefits principle is best illustrated in the United States by: A)personal income tax B)sales tax C)corporate income tax D)gasoline tax

Paying a fee every time you use the municipal golf course is an example of the _____ principle. A)benefits B)ability-to-pay C)progressive tax D)regressive tax

Taxation according to the ability-to-pay principle is best illustrated in the United States by: A)sales taxes. B)income taxes. C)excise taxes. D)user fees.

Since the terrorist attacks of September 11,2001,the Federal Aviation Agency has added a small security fee to every airplane ticket purchased.This is an example of: 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.

According to the _____ principle,those who use public services should bear the burden of the tax that pays for them. A)ability-to-pay B)tax fairness C)benefits D)spending

According to the _____ principle,those who can afford it should pay higher tax. A)ability-to-pay B)tax fairness C)benefits D)affordability

Which tax BEST illustrates the benefits principle of tax fairness? A)The local city playground is funded through a tax on all citizens. B)Roads and highways are built and maintained through 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.

Which tax BEST illustrates the ability-to-pay principle of tax fairness? A)The local city 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.

A principle suggesting that people with more income or wealth should pay more taxes is the _____ principle. A)ability-to-pay B)proportional tax C)lump-sum tax D)benefits received

Taxation according to the ability-to-pay principle is best illustrated in the United States by _____ taxes. A)sales B)personal income C)excise D)gasoline

Taxation according to the benefits-received principle is best illustrated by the _____ tax. A)income B)sales C)gift D)gasoline

You have to pay a fee every time you use your community swimming pool.This is an example of the _____ principle. A)regressive tax B)ability-to-pay C)progressive tax D)benefits

If tax efficiency is the only goal,a tax system should be designed to minimize its: A)burden. B)administrative costs. C)impact on the poor. D)burden and its administrative costs.

A tax system achieves equity when: 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.

A tax system achieves efficiency when: 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.

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

Suppose Congress passed a new tax system,such that all federal,state,and local taxes were replaced with one tax: a tax of $14,000 for every person 18 and over.This new tax system would clearly improve: A)tax equity. B)tax fairness. C)tax efficiency. D)government revenue.

A tax system _____ when it minimizes the direct and indirect costs to the economy of tax collection. A)is efficient B)is equitable C)has no deadweight loss D)is in equilibrium

A tax system _____ when taxes are distributed fairly. A)is efficient B)is equitable C)has no deadweight loss D)is in equilibrium

If a tax system is designed to minimize the sum of its deadweight loss and its administrative cost,its principal goal is: A)maximizing efficiency. B)maximizing equity. C)maximizing revenue. D)minimizing the tax burden.

_____ tax does NOT distort incentives and is best at promoting economic efficiency. A)A lump-sum B)FICA C)A property D)An income

If a tax system is well designed: A)it maximizes efficiency. B)it maximizes fairness. C)then efficiency can be improved only by making the system less fair. D)it maximizes efficiency and equity.

Which statement is CORRECT? A)If the government can make the tax system fairer without sacrificing efficiency,it should do so to maximize equity. B)If the government can make the tax system fairer without sacrificing efficiency,then the existing tax system is perfectly designed. C)There is no trade-off between equity and efficiency in the tax system. D)If the government can make the tax system fairer without sacrificing efficiency,it should seek to maximize equity at the expense of efficiency.

The richest 20% of families in the United States pay a much _____ share of total income taxes collected and a _____ share of FICA taxes than their share of total income. A)higher;lower B)lower;higher C)higher;higher D)lower;lower

The poorest 20% of families in the United States pay a _____ share of their total income in taxes. A)very large B)somewhat large C)small D)negative

Use the following to answer questions 136-138: -(Figure: Income Tax Payments)Use Figure: Income Tax Payments.Which panel or panels BEST represent the effects of a progressive income tax? A)A B)B C)C D)A and B

Use the following to answer questions 136-138: -(Figure: Income Tax Payments)Use Figure: Income Tax Payments.Which panel or panels BEST represent the effects of a proportional income tax? A)A B)B C)C D)A and B

Use the following to answer questions 136-138: -(Figure: Income Tax Payments)Use Figure: Income Tax Payments.Which panel or panels BEST represent the effects of a regressive income tax? A)A B)B C)C D)A and B

Brianna and Jess must pay an income tax.Both Brianna and Jess pay $1,000 in taxes each year,but Brianna earns $20,000 and Jess earns $10,000.From this information,you can infer that this tax is: A)progressive. B)regressive. C)proportional. D)equitable.

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: A)progressive. B)proportional. C)regressive. D)equitable.

Suppose an income tax is levied on none of the first $1,000,10% of the next $9,000,and 20% of the remainder of earnings.How much tax would Miranda have to pay if she earned $20,000? A)$2,900 B)$5,000 C)$4,900 D)$3,000

A _____ tax takes a larger share of the income of high-income taxpayers than of low-income taxpayers. A)sales B)regressive C)progressive D)flat

A tax that rises less than in proportion to income is described as: A)progressive. B)proportional. C)regressive. D)structural.

A progressive tax: A)takes a larger share of the income of high-income taxpayers than of low-income taxpayers. B)takes a smaller share of the income of high-income taxpayers than of low-income taxpayers. C)takes the same share of the income of high-income taxpayers as it does of low-income taxpayers. D)has no deadweight loss.

Suppose Governor Meridias decides to initiate a state income tax.The first $50,000 of household income is tax-free,while any income above $50,000 is taxed at 10%.A household earning $50,000 has a marginal tax rate of _____% and a tax rate of _____%. A)10;10 B)10;0 C)0;0 D)0;10

Suppose Governor Meridias decides to initiate a state income tax.The first $50,000 of household income is tax-free,while any income above $50,000 is taxed at 10%.The marginal tax rate for a household earning $75,000 is: A)greater than its average tax rate. B)less than its average tax rate. C)equal to its average tax rate. D)3.3%.

If personal income up to and including $25,000 is not taxed,income of $25,001 to $50,000 is taxed at 10%,and income over $50,000 is taxed at 25%,a family earning $60,000 of income will pay _____ in personal taxes. A)$5,000 B)$8,000 C)$11,250 D)$16,000

Paying a tax of $20 on an income of $100,a tax of $15 on an income of $200,and a tax of $12 on an income of $300 is an example of a _____ tax. A)flat B)proportional C)progressive D)regressive

A _____ tax takes a fixed percentage of income,regardless of the level of income. A)proportional B)benefits C)progressive D)regressive

A tax of $10 on an income of $100,$20 on an income of $200,and $30 on an income of $300 is: A)regressive. B)proportional. C)progressive. D)benefits.

A tax that takes a higher percentage of income as income rises is: A)proportional. B)an ability tax. C)progressive. D)regressive.

A tax of $10 on an income of $100,$25 on an income of $200,and $60 on an income of $300 is: A)progressive. B)proportional. C)regressive. D)flat.

A tax that takes a _____ percentage of income as income _____ is a _____ tax. A)lower;rises;progressive B)lower;rises;regressive C)higher;rises;proportional D)higher;falls;proportional

A tax is progressive if the tax payment is a: A)fixed percentage of income. B)lower percentage of income as income rises. C)higher percentage of income as income rises. D)higher percentage of income as income falls.

_____ taxes are paid on wages. A)Income B)Profits C)Property D)Sales

Annual _____ taxes are paid on the value of a home. A)income B)profits C)sales D)property

_____ taxes are paid on the purchase of most consumption goods. A)Income B)Property C)Sales D)Wealth

The government imposes a tax of $1,000 per household to fund a new public swimming pool.This tax is: A)regressive. B)proportional. C)progressive. D)flat.

A tax of $15 on an income of $200,$10 on an income of $300,and $8 on an income of $400 is: A)constant-rate. B)proportional. C)progressive. D)regressive.

A tax that takes a _____ is _____. A)fixed percentage of income;proportional B)fixed percentage of income;a benefits tax C)a smaller share of high income than of low income;progressive D)larger share of high income than of low income;regressive

A tax of $20 on an income of $200,$40 on an income of $400,and $50 on an income of $500 is: A)regressive. B)proportional. C)progressive. D)inverse.

A tax that takes a _____ percentage of income as income rises is _____. A)higher;proportional B)lower;an ability tax C)higher;progressive D)lower;a marginal tax

A tax of $20 on an income of $200,$40 on an income of $300,and $80 on an income of $400 is: A)progressive. B)proportional. C)regressive. D)constant-rate.

A regressive tax: A)takes a higher percentage of income as income rises. B)rises less than in proportion to income. C)takes a fixed percentage of income regardless of the taxpayer's level of income. D)takes a larger share of the income of high-income taxpayers than of low-income taxpayers.

A regressive tax takes a: A)fixed percentage of income. B)lower percentage of income as income rises. C)higher percentage of income as income rises. D)lower percentage of income as income falls.

The percentage of an increase in a taxpayer's income that is taxed away is the _____ rate. A)marginal tax B)tax C)total tax D)lower tax

If the marginal tax rate is higher than the average rate,the tax system is: A)proportional. B)progressive. C)constant. D)regressive.

If the marginal tax rate is less than the average tax rate,the tax system is: A)proportional. B)progressive. C)digressive. D)regressive.

If the marginal tax rate equals the average tax rate,the tax system is: A)proportional. B)progressive. C)digressive. D)regressive.

In 2016,the Social Security (FICA)tax was levied only on incomes up to $118,500.Which statement about this tax is CORRECT? A)A worker with an annual income of $50,000 and one with an annual income of $100,000 paid the same dollar amount of FICA tax. B)A worker with an annual income of $200,000 and one with an annual income of $118,500 paid the same dollar amount of FICA tax. C)The top 20% of income earners earned over 50% of total U.S.incomes in 2001,and they paid approximately 60% of the total FICA taxes collected that year. D)The percentage of income paid in FICA taxes was the same for a worker with an annual income of $50,000 and a worker with an annual income of $100,000.

Income tax rates are such that Mr.R.Hood earns $35,000 per year and pays $7,000 in taxes,while Mr.G.Gisbourne earns $1 million per year and pays $200,000 in taxes.This tax is: A)progressive. B)regressive. C)proportional. D)a lump-sum tax.

An efficient way to finance the provision of city services such as street cleaning would be to charge all city residents a lump-sum tax.Such a tax would be: A)progressive. B)regressive. C)proportional. D)This question can't be answered without knowing the amount of the tax.

Suppose Governor Meridias initiates a payroll tax of 10% on all income up to $50,000.Any income above $50,000 is not taxed.This payroll tax will be: A)progressive. B)proportional. C)regressive. D)structural.

Use the following to answer questions 174-177: -(Table: Taxes,Spending,and Income)Use Table: Taxes,Spending,and Income.Suppose Governor Meridias decides to initiate a state tax of 5% on all sales.This tax will be: A)progressive. B)proportional. C)regressive. D)structural.

Use the following to answer questions 174-177: -(Table: Taxes,Spending,and Income)Use 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. A)4.5;4 B)5;5 C)5;3.5 D)3.5;4.5

Use the following to answer questions 174-177: -(Table: Taxes,Spending,and Income)Use Table: Taxes,Spending,and Income.Suppose Governor Meridias decides to initiate a state income tax.The first $50,000 of household income is tax-free,while any income above $50,000 is taxed at 10%.The tax rate for a household earning $75,000 is _____%. A)10 B)5 C)3.3 D)0

Use the following to answer questions 174-177: -(Table: Taxes,Spending,and Income)Use Table: Taxes,Spending,and Income.Suppose Governor Meridias initiates a tax of 10% on all income up to $50,000.Income above $50,000 is not taxed.An individual earning $75,000 will have a average tax rate of _____%. A)10 B)0 C)6.67 D)5

If personal income up to and including $25,000 is not taxed,income of $25,001 to $50,000 is taxed at 10%,and income over $50,000 is taxed at 25%,a family earning income equal to $60,000 will pay a marginal tax rate of _____% and a average tax rate of _____%. A)12.5;25 B)10;15 C)25;8.3 D)25;25

The _____ rate applies to an additional $1 of taxable income. A)marginal tax B)tax C)total tax D)lower tax

Eli has annual earnings of $100,000 and Molly has annual earnings of $50,000.Each consumer goes to the mall and purchases a microwave oven for $100,and each pays an additional 7%,or $7,in sales tax.This tax is: A)regressive. B)a wealth tax. C)progressive. D)a property tax.

U.S.federal taxes are generally _____,while state and local taxes are generally _____. A)progressive;progressive B)progressive;regressive C)regressive;progressive D)regressive;regressive

The U.S.income tax is _____,while the FICA tax is _____. A)progressive;progressive B)progressive;regressive C)regressive;progressive D)regressive;regressive

The _____ rate on income represents the additional tax an individual pays if his or her income goes up by $1.This rate has _____ since 2000. A)tax;increased B)marginal tax;decreased C)marginal tax;increased D)tax;decreased

_____ and _____ taxes are the LARGEST sources of state and local government revenue. A)Profit;sales B)Property;sales C)FICA;income D)Sales;income

Sales taxes are considered to be: A)proportional. B)progressive. C)digressive. D)regressive.

FICA taxes are considered to be: A)proportional. B)progressive. C)flat. D)regressive.

The evidence suggests that federal taxes in the U.S.economy are: A)regressive. B)progressive. C)higher than they've ever been before. D)proportional.

The evidence suggests that taken collectively,taxes in the U.S.economy are: A)extremely regressive. B)extremely progressive. C)somewhat progressive. D)proportional.

Sales taxes are considered to be: A)an unfair burden on wealthy people,who spend more money on goods subject to sales tax. B)progressive. C)the most important source of revenue for the federal government. D)regressive.

The structure of the U.S.federal income tax system reflects the _____ principle. A)efficiency B)ability-to-pay C)benefits D)lump-sum

Which tax is the LARGEST source of federal government revenue? A)sales B)property C)individual income D)death

The two most important sources of federal revenue are the _____ taxes. A)FICA and personal income B)corporate income and FICA C)excise and personal income D)Social Security and excise

_____ tax is NOT a major source of revenue for the federal government. A)Income B)FICA C)Profits D)Property

Because of tax competition,state and local taxes tend to be _____;however,federal taxes tend to be _____. A)regressive;regressive B)progressive;regressive C)progressive;progressive D)regressive;progressive

A(n)_____ tax tends to encourage consumption and discourage saving and investing. A)consumption B)sales C)poll D)income

_____ tax is NOT used in the United States. A)Property B)Value-added C)Profits D)Sales

If personal income up to and including $25,000 is not taxed,income of $25,001 to $50,000 is taxed at 10%,and income over $50,000 is taxed at 20%,then a family earning an income of $75,000 will pay _____ in personal taxes. A)$6,000 B)$7,500 C)$11,250 D)$15,000

If personal income up to and including $25,000 is not taxed,income of $25,001 to $50,000 is taxed at 10%,and income over $50,000 is taxed at 20%,then a family earning an income of $75,000 will pay a n AVERAGE tax rate of _____%. A)5 B)7.5 C)10 D)20

If personal income up to and including $25,000 is not taxed,income of $25,001 to $50,000 is taxed at 10%,and income over $50,000 is taxed at 20%,then a family earning an income of $75,000 will pay a marginal tax rate of _____%. A)5 B)7.5 C)10 D)20

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 _____ in personal taxes. A)$6,000 B)$10,000 C)$13,000 D)$25,000

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 n AVERAGE tax rate of _____%. A)5 B)10 C)13 D)25

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 _____%. A)5 B)10 C)13 D)25

Use the following to answer questions 203-212: -(Figure: Tax Incidence)Use Figure: Tax Incidence.All other things unchanged,when a good or service is characterized by a relatively elastic supply,as shown in panel _____,a greater share of the burden of an excise tax is borne by _____. A)A;buyers B)B;sellers C)B;buyers D)A;sellers

Use the following to answer questions 203-212: -(Figure: Tax Incidence)Use 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 _____. A)A;buyers B)B;sellers C)A;sellers D)B;buyers

Use the following to answer questions 203-212: -(Figure: Tax Incidence)Use Figure: Tax Incidence.All other things unchanged,when a good or service is characterized by a relatively elastic demand,as shown in panel _____,the greater share of the burden of an excise tax on it is borne by _____. A)D;buyers B)D;sellers C)C;sellers D)C;buyers

Use the following to answer questions 203-212: -(Figure: Tax Incidence)Use Figure: Tax Incidence.All other things unchanged,when a good or service is characterized by a relatively inelastic demand,as shown in panel _____,the greater share of the burden of an excise tax on it is borne by _____. A)C;buyers B)C;sellers C)D;sellers D)D;buyers

Use the following to answer questions 203-212: -(Figure: Tax Incidence)Use Figure: Tax Incidence.All other things unchanged,the effect of an excise tax on gasoline in the short run is most likely illustrated by panel _____,and the greater share of the burden of the excise tax (shown by the tax wedge in each panel)is borne by _____. A)C;buyers B)D;sellers C)C;sellers D)D;buyers

Use the following to answer questions 203-212: -(Figure: Tax Incidence)Use Figure: Tax Incidence.All other things unchanged,the effect of an excise tax on gasoline in the long run is most likely illustrated by panel _____,and the greater share of the burden of the excise tax (shown by the tax wedge in each panel)is borne by _____. A)A;buyers B)B;sellers C)B;buyers D)A;sellers

Use the following to answer questions 203-212: -(Figure: Tax Incidence)Use 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)C;D B)C;A C)D;A D)B;A

Use the following to answer questions 203-212: -(Figure: Tax Incidence)Use 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)D;C B)A;B C)C;B D)B;A

Use the following to answer questions 203-212: -(Figure: Tax Incidence)Use Figure: Tax Incidence.Consumers are likely to bear more of the burden of an excise tax in the situations illustrated by panels: A)A and B. B)A and D. C)B and D. D)B and C.

Use the following to answer questions 203-212: -(Figure: Tax Incidence)Use Figure: Tax Incidence.Producers are likely to bear more of the burden of an excise tax in the situations illustrated by panels: A)A and B. B)A and C. C)B and D. D)B and C.

Use the following to answer questions 213-216: -(Figure: The Gasoline Market)Use Figure: The Gasoline Market.The pretax equilibrium price is $3,and the equilibrium quantity before tax is 20,000 gallons.An excise tax has been levied on each gallon of gasoline supplied by producers.Based on the graph,the incidence of the tax on suppliers is: A)$1.50. B)$1. C)$0.75. D)$15,000.

Use the following to answer questions 213-216: -(Figure: The Gasoline Market)Use Figure: The Gasoline Market.The pretax equilibrium price is $3,and the equilibrium quantity before tax is 20,000 gallons.An excise tax has been levied on each gallon of gasoline supplied by producers,shifting the supply curve upward.What is the tax rate? A)$1.75 per gallon B)$1 per gallon C)$2.50 D)$0.50

Use the following to answer questions 213-216: -(Figure: The Gasoline Market)Use Figure: The Gasoline Market.The pretax equilibrium price is $3,and the equilibrium quantity before tax is 20,000 gallons.An excise tax has been levied on each gallon of gasoline supplied by producers,shifting the supply curve upward.The total tax revenue collected by the government is equal to: A)$1.50. B)$15,000. C)$26,250. D)$30,000.

Use the following to answer questions 213-216: -(Figure: The Gasoline Market)Use Figure: The Gasoline Market.The pretax equilibrium price is $3,and the equilibrium quantity before tax is 20,000 gallons.An excise tax has been levied on each gallon of gasoline,shifting the supply curve upward.The deadweight loss from this tax is equal to: A)$1.50. B)$5,000. C)$15,000. D)$4,375.

Use the following to answer questions 217-221: -(Figure: The Market for Lattes)Use 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: 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.

Use the following to answer questions 217-221: -(Figure: The Market for Lattes)Use Figure: The Market for Lattes.If the government assesses a tax of $0.75 on sellers of lattes,the price producers will receive for a latte after the tax will: A)decrease from $2 to $1.75. B)decrease from $2 to $1.50. C)decrease from $2 to $1.25. D)change,but we cannot determine by how much.

Use the following to answer questions 217-221: -(Figure: The Market for Lattes)Use Figure: The Market for Lattes.If an excise tax of $1.50 is assessed on each latte,government revenue will be: A)$400. B)$600. C)$800. D)$1,200.

Use the following to answer questions 217-221: -(Figure: The Market for Lattes)Use Figure: The Market for Lattes.If an excise tax of $2.25 is assessed on each latte,government revenue will be: A)$225. B)$400. C)$450. D)$1,800.

Use the following to answer questions 217-221: -(Figure: The Market for Lattes)Use Figure: The Market for Lattes.If the excise tax increases from $1.50 to $2.25 per latte,government revenue will _____ by _____. A)decrease;$150 B)decrease;$75 C)increase;$150 D)increase;$225

Use the following to answer questions 222-231: -(Figure: The Market for SUVs)Use Figure: The Market for SUVs.If the government imposes a $60,000 tax on SUVs and collects it from the consumers,the _____ curve will shift _____ by _____. A)supply;upward;$30,000 B)supply;upward;$60,000 C)demand;downward;$30,000 D)demand;downward;$60,000

Use the following to answer questions 222-231: -(Figure: The Market for SUVs)Use Figure: The Market for SUVs..A quota of _____ will bring about the same price and output in the market for SUVs as would an excise tax of $30,000. A)2,000 B)3,000 C)4,000 D)The answer is impossible to determine.

Use the following to answer questions 222-231: -(Figure: The Market for SUVs)Use Figure: The Market for SUVs..A price _____ of _____ will bring about the same price and output in the market for SUVs as would an excise tax of $30,000. A)ceiling;$80,000 B)ceiling;$100,000 C)floor;$120,000 D)floor;$140,000

Use the following to answer questions 222-231: -(Figure: The Market for SUVs)Use Figure: The Market for SUVs.If the government imposes a $60,000 tax on SUVs (collected from the producers),consumers will pay _____ of the tax and producers will pay _____. A)$30,000;$30,000 B)$40,000;$20,000 C)$20,000;$40,000 D)$10,000;$50,000

Use the following to answer questions 222-231: -(Figure: The Market for SUVs)Use Figure: The Market for SUVs.A quota of _____ will bring about the same price and output in the market for yachts as would an excise tax of $60,000. A)2,000 B)3,000 C)4,000 D)The answer is impossible to determine.

Use the following to answer questions 222-231: -(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. A)ceiling;$80,000 B)ceiling;$100,000 C)floor;$100,000 D)floor;$160,000

Use the following to answer questions 222-231: -(Figure: The Market for SUVs)Use Figure: The Market for SUVs.If the government imposes a $30,000 tax on SUVs and collects it from the SUV suppliers,the _____ curve will shift _____ by _____. A)demand;downward;$15,000 B)supply;upward;$15,000 C)supply;upward;$30,000 D)demand;downward;$30,000

Use the following to answer questions 222-231: -(Figure: The Market for SUVs)Use Figure: The Market for SUVs.If the government imposes a $60,000 tax on SUVs (collected from the producers),the price of SUVs will rise to _____ and the government will collect _____. A)$100,000;$120 million B)$120,000;$90 million C)$140,000;$90 million D)$160,000;$120 million

Use the following to answer questions 222-231: -(Figure: The Market for SUVs)Use Figure: The Market for SUVs.If the government imposes a $30,000 tax on SUVs (collected from the producers),the price of SUVs will rise to _____ and the government will collect _____. A)$100,000;$120 million B)$120,000;$90 million C)$140,000;$90 million D)$160,000;$120 million

Use the following to answer questions 222-231: -(Figure: The Market for SUVs)Use Figure: The Market for SUVs.If the government imposes a $30,000 tax on SUVs (collected from the producers),consumers will pay _____ of the tax and producers will pay _____. A)$20,000;$10,000 B)$15,000;$15,000 C)$10,000;$20,000 D)$5,000;$25,000

If the government wants to limit sales of a particular good,it may do so by imposing a quota.However,the same reduction in sales may be achieved by an appropriately chosen excise tax.

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.

In general,the incidence of an excise tax is shared between buyers and sellers.

If the government imposes a $500 excise tax on SUVs and the demand curve for SUVs is downward-sloping,suppliers of SUVs will simply raise the price by $500 and consumers will bear the entire burden of the tax.

If demand for a good is perfectly inelastic,then consumers will bear the entire burden of an excise tax imposed on that good.

The FICA tax falls most heavily on workers because the price elasticity of demand for labor is greater than the price elasticity of supply of labor.

Although employers and wage earners each pay 50% of the FICA tax,the tax reduces wages to the extent that the incidence of the tax falls almost entirely on workers.

The deadweight loss of an excise tax arises because the tax prevents some mutually beneficial transactions.

The administrative costs of a tax include the costs incurred by the government in collecting the tax (such as the costs of operating the Internal Revenue Service)but exclude the costs incurred by individuals in paying the tax (such as accountants' fees).

Cigarette taxes have eliminated the wedge between the demand price for cigarettes and the supply price of cigarettes.

If the government imposes a per-unit tax on good Y and the supply of good Y is perfectly inelastic,there will be no deadweight loss due to the tax.

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.

If demand is perfectly inelastic,the deadweight loss caused by a tax will be zero.

The benefits principle says that taxes should be used to benefit the maximum number of people.

For a tax system to achieve equity,it must first achieve efficiency.

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

Economic policies often involve trade-offs between efficiency and equity.Fortunately,tax policy is an exception because it is easy to find taxes that are both efficient and fair.

Lump-sum taxes promote economic efficiency but violate the ability-to-pay principle.

The argument for progressive taxes is based on the ability-to-pay principle.

A tax system achieves efficiency when it maximizes the amount of tax paid by the wealthiest citizens.

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.

If the marginal tax rate and the average tax rate are equal for all levels of income,then the tax structure is proportional.

Overall,the taxes collected by the federal government are progressive.

In the United States,poor people and the middle class pay the largest share of income taxes.

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.

Producers in a particular market will bear the greater burden of an excise tax: A)the more price-elastic the demand is relative to supply. B)the less price-elastic demand is relative to supply. C)if demand has the same price elasticity as supply. D)regardless of the price elasticity of demand or supply.

Consumers in a particular market will bear the greater burden of an excise tax: A)the more price-elastic supply is relative to demand. B)the less price-elastic supply is relative to demand. C)if supply has the same price elasticity as demand. D)regardless of the price elasticity of demand or supply.

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? A)consumers B)producers C)both consumers and producers equally D)government

Suppose the price elasticity of demand is relatively elastic and the price elasticity of supply is relatively inelastic in a specific market.If an excise tax is imposed on this good,who will bear the greater burden of the tax? A)consumers B)producers C)both consumers and producers equally D)government

When the imposition of an excise tax causes the quantity demanded and quantity supplied to decrease relative to the no-tax equilibrium,this will result in: A)deadweight loss. B)increases in producer surplus. C)increases in consumer surplus. D)increases in both consumer and producer surplus.

Price elasticities of demand and supply will NOT play a major role in determining: A)the ability of policy makers to change consumption of a good via the imposition of an excise tax. B)the deadweight loss arising from the imposition of an excise tax. C)the burden of the tax on consumers and producers. D)administrative costs of imposing an excise tax.

Deadweight losses arising from an excise tax are greatest when demand: A)and supply are relatively inelastic. B)is relatively inelastic and supply is relatively elastic C)is relatively elastic and supply is relatively inelastic. D)and supply are relatively elastic.

The ability-to-pay principle regarding taxes suggests that: A)the efficiency of a tax is the key feature in designing it. B)those who can afford it should bear the greater burden of the tax. C)those who benefit most from the tax should bear the greater burden of the tax. D)higher-income individuals should pay the same amount as lower-income individuals.

The benefits principle of taxation means individuals pay according to: 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.

Use the following to answer questions 276-279: -(Table: Three Tax Structure Proposals)Use Table: Three Tax Structure Proposals.A regressive tax structure can be found in: A)proposal 1. B)proposal 2. C)proposal 3. D)all of the proposals.

Use the following to answer questions 276-279: -(Table: Three Tax Structure Proposals)Use Table: Three Tax Structure Proposals.Policy makers interested in implementing a progressive tax structure would suggest using: A)proposal 1. B)proposal 2. C)proposal 3. D)all of the proposals,since all are progressive.

Use the following to answer questions 276-279: -(Table: Three Tax Structure Proposals)Use Table: Three Tax Structure Proposals.If one wished to use a proportional or flat tax structure,one should use proposal _____,in which the percentage of income taxed is _____%. A)1;20 B)2;10 C)3;20 D)2;20

Use the following to answer questions 276-279: -(Table: Three Tax Structure Proposals)Use Table: Three Tax Structure Proposals.What percentage of income does an individual pay in taxes under proposal 3 if that individual's pretax income is $100,000? A)2% B)10% C)20% D)25%

A regressive tax structure is one in which taxes: A)rise less than in proportion to income. B)rise more than in proportion to income. C)rise exactly in proportion to income. D)stay the same regardless of income changes.

The percentage of an increase in income that is taxed is: A)the marginal rate. B)a regressive tax. C)a flat tax. D)after tax.

In the United States,taxes tend to be regressive at: A)federal,state,and local levels. B)federal and state levels. C)state and local levels. D)no levels of government.

A cost(s)NOT associated with the imposition of a tax is/are: A)deadweight loss. B)administrative cost. C)revenues. D)equilibrium pricing.

Use the following to answer questions 284-290: -(Figure: A Market with a Tax)Use Figure: A Market with a Tax.The excise tax imposed on this good is equal to: A)P₁ - P₂. B)P₁ - P₃ C)P₂ - P₃. D)P₁ - P₅.

Use the following to answer questions 284-290: -(Figure: A Market with a Tax)Use Figure: A Market with a Tax.Before the tax is imposed,consumer surplus is equal to the areas: A)A + B + C + D + E. B)A + B + C. C)A + B + C + D + E + F. D)D + E + F.

Use the following to answer questions 284-290: -(Figure: A Market with a Tax)Use Figure: A Market with a Tax.Before the tax,producer surplus is equal to the areas: A)A + B + C + D. B)D + E + F + G. C)A + B + C + D + E + F. D)A + B + C.

Use the following to answer questions 284-290: -(Figure: A Market with a Tax)Use Figure: A Market with a Tax.The tax revenue collected by the government is equal to the area: A)(P₁ - P₃)Q_1. B)(P₁ - P₅)Q₂. C)(P₂ - P₃)Q₁. D)(P₁ - P₂)Q₂.

Use the following to answer questions 284-290: -(Figure: A Market with a Tax)Use Figure: A Market with a Tax.The transfer of consumer surplus to the government is equal to the area: A)B. B)C. C)D. D)F.

Use the following to answer questions 284-290: -(Figure: A Market with a Tax)Use Figure: A Market with a Tax.The deadweight loss arising from the imposition of this tax is equal to the areas: A)B + D B)D + E. C)B + C. D)C + F.

Use the following to answer questions 284-290: -(Figure: A Market with a Tax)Use Figure: A Market with a Tax.The efficiency loss resulting from this tax is: A)(P₁ - P₃)Q₂. B)(P₁ - P₂)Q₁ C)0.5(P₁ - P₃)(Q₂ - Q₁). D)0.5(P₁ - P₃)Q₁.

Use the following to answer questions 291-296: -(Scenario: The Market for Good X)Use Scenario: The Market for Good X.If a $1 per unit tax is imposed on this good,the new supply curve will be: A)P = 0.33Q + 1. B)P = 50 - 0.5Q C)P = 0.33Q - 1. D)P = 0.33Q + 1 + 50 - 0.5Q.

Use the following to answer questions 291-296: -(Scenario: The Market for Good X)Use Scenario: The Market for Good X.If a $1 per unit tax is imposed,the price of good X will increase by (round all calculations to two decimal places): A)$20.00. B)$0.60. C)$1.00. D)$1.50.

Use the following to answer questions 291-296: -(Scenario: The Market for Good X)Use Scenario: The Market for Good X.If a $1 per unit tax is imposed,the deadweight loss associated with the tax will be equal to (round all calculations to two decimal places): A)$1.00. B)$20.00. C)$0.50. D)$0.60.

Use the following to answer questions 291-296: -(Scenario: The Market for Good X)Use Scenario: The Market for Good X.The tax revenue collected by government from a $1 per unit tax will be (round all calculations to two decimal places): A)$1.00. B)$59.04. C)$60.00. D)$60.50.

Use the following to answer questions 291-296: -(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): A)$1.00. B)$0.40. C)$58.80. D)$60.00.

Use the following to answer questions 291-296: -(Scenario: The Market for Good X)Use Scenario: The Market for Good X.The per-unit tax incidence on consumers is equal to (round all calculations to two decimal places): A)$1.00. B)$0.60. C)$58.80. D)$60.00.