Question : 61) Suppose the government increases the Social Security tax imposed : 1239158

61) Suppose the government increases the Social Security tax imposed on employers by 25 percent. This tax leads to

A) an increase in the supply of labor.

B) a decrease in the supply of labor.

C) a decrease in the demand for labor.

D) no change in the demand for labor.

E) a decrease in the supply of labor and an increase in the demand for labor.

62) Suppose the supply of labor is more inelastic than the demand for labor. Then, a Social Security tax imposed on employers

A) shifts the demand curve for labor leftward.

B) lowers the wage rate received by workers.

C) leads to the workers paying more of the tax than the employers.

D) Only answers B and C are correct.

E) Answers A, B, and C are correct.

63) Consider a Social Security tax on workers versus a Social Security tax on employers. In comparing the outcomes of each type of tax, we see that

A) workers receive a higher take-home wage when the tax is imposed on employers than when the tax is imposed on workers.

B) workers receive the same take-home wage when the tax is imposed on workers and when the tax is imposed on employers.

C) employers pay a lower total wage when the tax is imposed on workers.

D) employment decreases by more when the tax is imposed on employers than when the tax is imposed on workers.

E) employment decreases by more when the tax is imposed on workers than when the tax is imposed on employers.

64) If Congress wanted to change the Social Security tax so that firms paid most of the tax, they would need to

A) change the tax laws so that all of the Social Security tax was imposed on firms.

B) change the tax laws so that all of the Social Security tax was imposed on workers.

C) change the tax laws so that more than 50 percent of the Social Security tax was imposed on firms.

D) change the tax laws so that more than 50 percent of the Social Security tax was imposed on workers.

E) None of the above because the incidence of the Social Security tax does not depend on the tax laws but instead depends on the elasticities of the demand for labor and the supply of labor.

65) For 2011, the federal government reduced the Social Security tax on workers by 2 percentage points. This will likely cause

A) an increase in the quantity of workers employed and a decrease in deadweight loss.

B) an increase in the quantity of workers employed and an increase in deadweight loss.

C) a decrease in the quantity of workers employed and a decrease in deadweight loss.

D) a decrease in the quantity of workers employed and an increase in deadweight loss.

E) no change in the quantity of workers employed since the demand for labor is more elastic than the supply of labor.

66) In 2010, Social Security taxes of over 11 percent were imposed on all income up to $104,000. For income that exceeded $104,000, no Social Security tax was imposed. Hence the Social Security tax is a

A) progressive tax.

B) proportional tax.

C) regressive tax.

D) fair-incidence tax.

E) type of tax that is impossible to determine without more information.

67) The percentage of an additional dollar of income that is paid in tax is the

A) sales tax.

B) capital tax.

C) marginal tax rate.

D) personal income tax.

E) regressive tax.

68) If the average tax rate is constant as income increases, then the tax is called

A) regressive.

B) progressive.

C) proportional.

D) an average tax.

E) efficient.

69) A tax on labor income

A) increases the quantity employed because the demand for labor increases.

B) decreases the quantity employed because the supply of labor decreases.

C) increases the quantity employed because the supply of labor increases.

D) decreases the quantity employed because the demand for labor increases.

E) does not change the quantity employed because people must have jobs in order to earn any income.

70) The incidence of an income tax on labor income is generally that the tax is

A) paid by only workers.

B) paid by only employers.

C) shared equally between workers and employers.

D) shared but not necessarily equally between workers and employers.

E) funded by the deadweight loss.

71) In the labor market shown in the graph, the government introduces a 10 percent income tax. The employer pays ________ cents of the tax and the employee pays ________ cents of the tax.

A) 45; 50

B) 95; 0

C) 0; 95

D) 50; 45

E) 42.5; 42.5

72) When governments tax capital income, the equilibrium quantity of capital

A) increases because of the international mobility of capital.

B) does not change because the supply of capital is perfectly elastic.

C) decreases.

D) does not change because the supply of capital is perfectly inelastic.

E) might increase or decrease depending on whether the demand for capital is inelastic or elastic.

73) If the supply of capital is perfectly elastic, the incidence of a tax on capital income is

A) paid entirely by the suppliers of capital.

B) paid entirely by firms that demand capital.

C) shared equally between firms that demand capital and the suppliers of capital.

D) shared but not equally between firms that demand capital and the suppliers of capital.

E) unknown.

74) A tax on income from land in Montana is borne entirely by landowners because the

A) demand for land is perfectly inelastic.

B) supply of land is perfectly inelastic.

C) supply of land is perfectly elastic.

D) demand for land is perfectly elastic.

E) deadweight loss from the tax would otherwise be infinite.

75) When a Social Security tax is imposed on workers, employment ________ and when a Social Security tax is imposed on employers, employment ________.

A) increases; increases

B) increases; decreases

C) decreases; increases

D) decreases; decreases

E) decreases; does not change

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81) If the marginal cost of producing a television is constant at $200, then a firm should produce this item.

A) only if the marginal benefit it receives is greater than $200 plus an acceptable profit margin.

B) as long as the marginal benefit it receives is just equal to or greater than $200.

C) as long as its marginal cost does not rise.

D) until the marginal benefit it receives reaches zero.

82) Which of the following is an example of a "how much" decision?

A) The Pleasantville movie theatre is open only in the evenings. The theatre's manager is debating whether to add daily matinee shows.

B) The Zhous have demolished their old home and are debating whether to build a ranch-style house or a Craftsman home.

C) You're planning to hold a graduation party and must decide between having your party catered or having a pot-luck.

D) Chelsea has withdrawn from the swim team to take up a full-time job.

83) Which of the following is an example of a "how much" decision?

A) Octavia is debating whether to buy a pair of Jimmy Choo shoes or Steve Madden boots.

B) Humberto has taken a second job to earn money to buy a Harley-Davidson SuperLow Sportster.

C) You plan on going to Las Vegas for your birthday and are deciding if you should fly or drive.

D) Diana is trying to decide if she should open her pet shop on Sundays.

84) Marginal cost is the ________ associated with undertaking an activity.

A) total cost

B) extra cost.

C) opportunity cost.

D) foregone cost.

85) Cassie's Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent $800 purchasing, cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What is her marginal benefit if she sells the quilt "as is" now?

A) $100

B) $900

C) She makes a marginal loss of $600, not a marginal benefit.

D) The marginal benefit cannot be determined.

86) Cassie's Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent $800 purchasing, cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What is the marginal cost of completing the task?

A) $200

B) $500

C) $1,000

D) $1,000 plus the value of her time

87) Cassie's Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent $800 purchasing, cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What should she do?

A) She should cut her losses and sell the quilt now.

B) It does not matter what she does; she is going to take a loss on her project.

C) She should purchase the period fabric, complete the task and then sell the quilt.

D) She should not do anymore work on the quilt because she has already spent too much time on it and has not been paid for that time.

88) Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. What is Lionel's marginal benefit if he sells the standard package?

A) $10

B) $15

C) $25

D) $40

89) Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. What is Lionel's marginal cost of adding the shrub-trimming service to the standard package?

A) $10

B) $15

C) $25

D) $40

90) Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. Should Lionel continue to offer the shrub-trimming service?

A) Yes, his marginal benefit is greater than his marginal cost.

B) Yes, but only if he raises the price of the standard package.

C) No, his marginal benefit is less than his marginal cost.

D) More information is needed for Lionel to make this decision.