Question :
11) Economists argue that the corporate income tax an example : 1388029
11) Economists argue that the corporate income tax is an example of a tax with a high deadweight loss because
A) some of the burden of the tax is passed on to consumers in the form of higher prices.
B) it discourages corporations from undertaking capital investments to enhance market competitiveness.
C) taxing a corporation’s income amounts to double taxing the earnings on individual shareholders’ investments in corporations.
D) it encourages corporations to seek ways to evade taxes.
12) The corporate income tax is ultimately paid by all of the following except
A) owners of the corporation.
B) the corporation’s debtors in the form of lower rates of return on the corporation’s bonds.
C) customers in the form of higher prices.
D) employees in the form of lower wages.
13) Consider the following methods of taxing a corporation’s income:
a.A flat tax, as opposed to a progressive tax, is levied on corporate profits.
b.A system whereby a corporation calculates its annual profit and notifies each shareholder of her portion of the profits. The shareholder would then be required to include this amount as taxable income for her personal income tax. The corporation does not pay a tax.
c.A system where the federal government continues to tax corporate income through the corporate income tax but allows individual taxpayers to receive, tax free, corporate dividends and capital gains.
Which of the methods above would avoid double taxation?
A) a, b, and c
B) a and b only
C) a and c only
D) b and c only
Figure 18-2
Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
14) Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the consumer’s burden of the tax
A) is Pa – Pc under either supply curve.
B) is Pb – Pc under either supply curve.
C) is Pa – Pc if the supply curve is S0 and Pb – Pc if the supply curve is S1.
D) is Pa – Pd if the supply curve is S0 and Pb – Pe if the supply curve is S1.
15) Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the consumer’s burden of the tax
A) is greater under the more elastic supply curve S0.
B) is greater under the less elastic supply curve S0.
C) is greater under the less elastic supply curve S1.
D) is the same under either supply curve because there is a single demand curve that captures buyers’ market behavior.
16) Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the producer’s burden of the tax
A) is Pa – Pd under either supply curve.
B) is Pb – Pe under either supply curve.
C) is Pa – Pd if the supply curve is S0 and Pb – Pe if the supply curve is S1.
D) is Pc – Pd if the supply curve is S0 and Pc – Pe if the supply curve is S1.
17) Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the producer’s burden of the tax
A) is greater under the more elastic supply curve S0.
B) is greater under the less elastic supply curve S0.
C) is greater under the less elastic supply curve S1.
D) is the same under either supply curve because there is a single demand curve that captures buyers’ market behavior.
18) Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the government’s revenue from the tax is represented by the area
A) (PaPc × Qa) if the supply curve is S0 and (PbPc × Qb) if the supply curve is S1.
B) (PaPd × Qa) if the supply curve is S0 and (PbPe × Qb) if the supply curve is S1.
C) (PaPe × Qa) under either supply curve.
D) (PbPe × Qb) under either supply curve.
19) Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the government’s revenue from the tax
A) is larger if the supply curve is S0.
B) is larger if the supply curve is S1.
C) is identical under either supply curve.
D) is not maximized.
20) Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, what is the size of the deadweight loss, if there is any?
A) the area adc if the supply curve is S0 and the area bec if the supply curve is S1.
B) the area afcd if the supply curve is S0 and the area bfce if the supply curve is S1.
C) the area becf under either supply curve.
D) There is no deadweight loss; revenue raised is used to fund government projects.
21) Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold,
A) the deadweight loss is identical under either supply curve.
B) the deadweight loss is greater under the supply curve S1.
C) the deadweight loss is greater under the supply curve S0.
D) there is no deadweight loss since revenue raised is used to fund government projects.
