Question 1

Scenario: The Market for Good X:
The market for good X can be depicted with the following demand and supply equations: Demand: P = 50 - 1/2Q
Supply: P = 1/3Q
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.If a $1 per unit tax is imposed, the price of good X will increase by:
A.$20.
B.$0.60.
C.$1.00.
D.$1.50.

Accepted Answer

The answer of Scenario: The Market for Good X:
The market...

Question 2

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

Accepted Answer

When demand is relatively inelastic and supply is elastic, consumers tend to bear a greater burden of the tax because their demand does not decrease significantly with a price increase, whereas producers can more easily adjust their quantity supplied.

Question 3

When the imposition of an excise tax causes the quantity demanded and quantity supplied to decrease, 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.

Accepted Answer

The answer of When the imposition of an excise tax...

Question 4

The benefits principle of tax payments means individuals pay based on the:
A.benefits they gain from use of a good or service.
B.benefits gained by society as a whole.
C.benefits to government from having taxpayers.
D.ability to pay.

Accepted Answer

The answer of The benefits principle of tax payments means...

Question 5

Scenario: The Market for Good X:
The market for good X can be depicted with the following demand and supply equations: Demand: P = 50 - 1/2Q
Supply: P = 1/3Q
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.If a $1 per unit tax is imposed on this good, the new supply curve will be:
A.P = 1/3Q + 1.
B.P = 50 - 1/2Q
C.P = 1/3Q - 1.
D.P = 1/3Q + 1 + 50 - 1/2Q.

Accepted Answer

The answer of Scenario: The Market for Good X:
The market...

Question 6

(Table: Three Tax Structure Proposals) Look at the table Three Tax Structure Proposals.What percentage of income does an individual pay in taxes under proposal 3 if that individual's
pre-tax income is $100,000?
A.2%
B.10%
C.20%
D.25%

Accepted Answer

The answer of (Table: Three Tax Structure Proposals) Look at...

Question 7

Deadweight losses arising from the presence of 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.

Accepted Answer

The answer of Deadweight losses arising from the presence of...

Question 8

(Table: Three Tax Structure Proposals) Look at the 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.

Accepted Answer

The answer of (Table: Three Tax Structure Proposals) Look at...

Question 9

Figure: A Market with a Tax
   (Figure: A Market with a Tax) Look at the figure A Market with a Tax.The tax revenue collected by the government is equal to the area: 
A.(P₁ - P₃)Q₁
B.(P₁ - P5)Q₂.
C.(P₂ - P₃)Q₁.
D.(P₁ - P₂)Q₂.

Accepted Answer

The answer of Figure: A Market with a Tax
 ...

Question 10

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

Accepted Answer

The answer of The percentage of an increase in income...

Question 11

All of the following are costs associated with the imposition of a tax except:
A.deadweight loss.
B.administrative cost.
C.tax revenues received from taxpayers.
D.equilibrium pricing.

Accepted Answer

The answer of All of the following are costs associated...

Question 12

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

Accepted Answer

The answer of Suppose the price elasticity of demand is...

Question 13

(Table: Three Tax Structure Proposals) Look at the 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.

Accepted Answer

The answer of   (Table: Three Tax Structure Proposals)...

Question 14

Figure: A Market with a Tax
(Figure: A Market with a Tax) Look at the figure A Market with a Tax.The efficiency loss resulting from this tax is:
A.(P₁ - P₃)Q₂.
B.(P₁ - P₂)Q₁
C.1/2(P₁ - P₃)(Q₂ - Q₁).
D.1/2(P₁ - P₃)Q₁.

Accepted Answer

The answer of Figure: A Market with a Tax
(Figure: A...

Question 15

Figure: A Market with a Tax
(Figure: A Market with a Tax) Look at the 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.

Accepted Answer

The answer of Figure: A Market with a Tax
(Figure: A...

Question 16

Price elasticities of demand and supply will not play a major role in determining which of the following?
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

Accepted Answer

The answer of Price elasticities of demand and supply will...

Question 17

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.

Accepted Answer

Taxes tend to be regressive at the state and local levels in the United States because these levels of government often rely more heavily on sales taxes, property taxes, and other fees that take a larger percentage of income from lower-income individuals than from higher-income individuals.

Question 18

The ability-to-pay principle regarding taxes suggests that:
A.the efficiency of a tax is the key feature in designing a tax.
B.those who have the greater ability to pay 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.

Accepted Answer

The answer of The ability-to-pay principle regarding taxes suggests that:
A.the...

Question 19

(Table: Three Tax Structure Proposals) Look at the 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%

Accepted Answer

The answer of (Table: Three Tax Structure Proposals) Look at...

Question 20

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.

Accepted Answer

A regressive tax structure is characterized by taxes that rise less than in proportion to income, meaning as income increases, the tax rate effectively decreases.

Quiz 7: Taxes

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

When the imposition of an excise tax causes the quantity demanded and quantity supplied to decrease, 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.

The benefits principle of tax payments means individuals pay based on the: A.benefits they gain from use of a good or service. B.benefits gained by society as a whole. C.benefits to government from having taxpayers. D.ability to pay.

(Table: Three Tax Structure Proposals) Look at the table Three Tax Structure Proposals.What percentage of income does an individual pay in taxes under proposal 3 if that individual's pre-tax income is $100,000? A.2% B.10% C.20% D.25%

Deadweight losses arising from the presence of 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.

(Table: Three Tax Structure Proposals) Look at the 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.

Figure: A Market with a Tax (Figure: A Market with a Tax) Look at the figure A Market with a Tax.The tax revenue collected by the government is equal to the area: A.(P₁ - P₃)Q₁ B.(P₁ - P5)Q₂. C.(P₂ - P₃)Q₁. D.(P₁ - P₂)Q₂.

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

All of the following are costs associated with the imposition of a tax except: A.deadweight loss. B.administrative cost. C.tax revenues received from taxpayers. D.equilibrium pricing.

(Table: Three Tax Structure Proposals) Look at the 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.

Figure: A Market with a Tax (Figure: A Market with a Tax) Look at the figure A Market with a Tax.The efficiency loss resulting from this tax is: A.(P₁ - P₃)Q₂. B.(P₁ - P₂)Q₁ C.1/2(P₁ - P₃)(Q₂ - Q₁). D.1/2(P₁ - P₃)Q₁.

Figure: A Market with a Tax (Figure: A Market with a Tax) Look at the 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.

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.

(Table: Three Tax Structure Proposals) Look at the 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%

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.