Question : 8.5   Integrative Questions 1) The phrase “tax incidence” refers to A) how : 1226570

 

8.5   Integrative Questions

 

1) The phrase “tax incidence” refers to

A) how easy it is to evade the tax.

B) how taxes redistribute income.

C) the degree of progressiveness or regressiveness of the tax.

D) who actually bears the burden of paying the tax.

E) how much the government collects in revenue from a tax.

 

2) If the demand curve for hamburgers is downward sloping and the supply curve for hamburgers is upward sloping, then a tax imposed on hamburgers ________ the price paid by buyers and ________ the price received by sellers.

A) raises; raises

B) raises; lowers

C) lowers; raises

D) lowers; lowers

E) does not change; does not change

3) We can see the inefficiencies created by a sales tax because

A) a deadweight loss occurs.

B) the tax creates an excess burden.

C) at the quantity produced, marginal benefit equals marginal cost.

D) Both answers A and B are correct.

E) Both answers B and C are correct.

 

4) If neither the demand nor the supply for goods or labor is perfectly inelastic, then a sales tax on a good ________ a deadweight loss and an income tax ________ a deadweight loss.

A) creates; creates

B) creates; does not create

C) does not create; create

D) does not create; does not create

E) might create; might create

 

5) Which of the following is true?

i.A tax on buyers has the same effect as the same sized tax on sellers.

ii.The more elastic the demand, the larger is the share of the tax paid by the buyers.

iii.The U.S. income tax is regressive.

A) Only i

B) Only ii

C) Only iii

D) ii and iii

E) i and ii

6) Which of the following is true?

i.If supply is perfectly inelastic, the tax creates no deadweight loss.

ii.The elasticities of supply and demand, not Congress, determine who pays the income tax.

iii.A tax is progressive if the average tax rate falls with income.

A) Only i

B) Only ii

C) Only iii

D) ii and iii

E) i and ii

 

7) Which of the following is true?

i.If demand is perfectly elastic, the tax creates no deadweight loss.

ii.The more elastic the supply of a factor of production, the greater is the deadweight loss from an income tax.

iii.A tax is regressive if the average tax rate rises with income.

A) Only i

B) Only ii

C) Only iii

D) ii and iii

E) i and ii

 

8) A sales tax on cigarettes would likely decrease the quantity demanded by a smaller amount

A) for smokers who view cigarettes as a necessity.

B) for smokers who are not addicted.

C) for smokers with smaller incomes.

D) the longer the time elapsed.

E) for smokers who view cigarettes as a luxury.

9) The figure above shows the impact of an income tax. The deadweight loss created by the income tax equals area

A) bce.

B) fed.

C) acf.

D) feba.

E) The question errs because an income tax does not create a deadweight loss.

 

10) The figure above shows the impact of an income tax. The revenue collected by the government equals area

A) bce.

B) feba.

C) fed.

D) acf.

E) None of the above answers is correct.

11) The imposition of ________ shifts the labor demand curve downward.

A) a sales tax

B) an income

C) a social security tax on workers

D) a social security tax on employers

E) Both answers C and D are correct.

 

12)  ________ tax is progressive if the ________.

A) An income; average tax rate is constant as income increases

B) An income; average tax rate increases with income

C) Any; average tax rate is constant as income increases

D) Any; average tax rate decreases as income increases

E) A social security; tax is imposed on employers rather than workers

 

13) To levy a tax based on the benefits principle to pay for a bridge, the government

A) would impose an income tax instead of a social security tax on workers.

B) would impose a social security tax on workers instead of an income tax.

C) needs to know each person’s benefit from the bridge.

D) needs to be able to calculate the deadweight loss of a tax.

E) cannot impose the tax on anyone who uses the bridge.

14) Which of the following taxes guarantees vertical equity?

i)income tax

ii)social security tax on workers

iii)social security tax on employers

A) i only

B) i and ii

C) ii and iii

D) iii only

E) None of the above taxes guarantees vertical equity.