Question 1

Which of the following tools help us evaluate how taxes affect economic well-being?
(i)
Consumer surplus
(ii)
Producer surplus
(iii)
Tax revenue
(iv)
Deadweight loss

A)(i)and (ii)only
B)(i), (ii),and (iii)only
C)(iii)and (iv)only
D)(i), (ii), (iii),and (iv)

D

Accepted Answer

All four tools—consumer surplus, producer surplus, tax revenue, and deadweight loss—are used to evaluate the impact of taxes on economic well-being. Consumer and producer surplus measure the benefits to buyers and sellers, tax revenue indicates government income, and deadweight loss represents the loss of economic efficiency.

Question 2

Who once said that taxes are the price we pay for a civilized society?&#10;A)Aristotle&#10;B)George Washington&#10;C)Oliver Wendell Holmes,Jr.&#10;D)Ronald Reagan

Accepted Answer

Oliver Wendell Holmes,Jr. famously stated in his dissenting opinion in the U.S. Supreme Court case of Compañía General de Tabacos de Filipinas v. Collector of Internal Revenue (1927) that "taxes are the price we pay for a civilized society."

Question 3

Anger over British taxes played a significant role in bringing about the&#10;A)election of John Adams as the second American president.&#10;B)American Revolution.&#10;C)War of 1812.&#10;D)&#34;no new taxes&#34; clause in the U.S.Constitution.

Accepted Answer

The anger over British taxes, particularly the Stamp Act and the Townshend Acts, was a major factor that contributed to the American Revolution. The colonists believed that they were being taxed without representation in the British government, which violated their rights as British citizens. This led to widespread protests, boycotts, and eventually armed conflict between the colonies and Britain. The revolution ultimately led to the establishment of the United States as an independent nation.

Question 4

In 1776,the American Revolution was sparked by anger over&#10;A)the extravagant lifestyle of British royalty.&#10;B)the crimes of British soldiers stationed in the American colonies.&#10;C)British taxes imposed on the American colonies.&#10;D)the failure of the British to protect American colonists from attack by hostile Native Americans.

Accepted Answer

The American Revolution was sparked by anger over British taxes imposed on the American colonies. This included the Stamp Act, Townshend Acts, and the Tea Act, which were seen as unjust and tyrannical by the colonists. The phrase "no taxation without representation" became a rallying cry for those who felt that the British government was unfairly imposing taxes on them without giving them a say in how they were governed.

Question 5

To fully understand how taxes affect economic well-being,we must compare the&#10;A)consumer surplus to the producer surplus.&#10;B)price paid by buyers to the price received by sellers.&#10;C)reduced welfare of buyers and sellers to the revenue raised by the government.&#10;D)consumer surplus to the deadweight loss.

Accepted Answer

To fully understand how taxes affect economic well-being, we need to compare the reduction in welfare of both buyers and sellers due to the tax to the revenue generated by the government. This is because taxes lead to a decrease in both consumer and producer surplus, resulting in a net loss of economic well-being. Comparing this loss to the revenue raised by the government helps us understand the overall impact of the tax on the economy. Options A, B, and D are not comprehensive enough to fully understand the impact of taxes on economic well-being.

Deck 8: 0: Sec 80 Mc Application the Cost of Taxation