Question 1

Scenario 12-2
Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket.In addition,suppose the price of a movie ticket is $5.
-Refer to Scenario 12-2.Suppose the government levies a tax of $3 on a movie ticket and that,as a result,the price of a movie ticket increases to $8.What is total consumer surplus after the tax is imposed?

Accepted Answer

A)   $0
B)   $1
C)   $2
D)   $3E) A) and B)
F) A) and C)

Question 2

Deadweight losses represent the

Accepted Answer

A)   inefficiency that taxes create.
B)   shift in benefit from producers to consumers.
C)   part of consumer and producer surplus that is now revenue to the government.
D)   loss in profit to producers when quantity demanded falls as a result of higher prices.E) B) and C)
F) None of the above

Question 3

Vertical equity is not consistent with a regressive tax structure.

Accepted Answer

A) True 
 B)False

Question 4

Scenario 12-1
Suppose Jim and Joan receive great satisfaction from their consumption of cheesecake.Joan would be willing to purchase only one slice and would pay up to $6 for it.Jim would be willing to pay $9 for his first slice,$7 for his second slice,and $3 for his third slice.The current market price is $3 per slice.
-Refer to Scenario 12-1.Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $7.What is Joan's consumer surplus from cheesecake?

Accepted Answer

A)   zero
B)   $2
C)   $3
D)   $6E) A) and B)
F) None of the above

Question 5

Income taxes and property taxes generate the highest tax revenue for state and local governments.

Accepted Answer

A) True 
 B)False

Question 6

Table 12-14
The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown.
 
-Refer to Table 12-14.Which tax schedules are regressive?

Accepted Answer

A)   Tax Schedule A and Tax Schedule B
B)   Tax Schedule B and Tax Schedule C
C)   Tax Schedule C and Tax Schedule D
D)   None of the Tax Schedules are regressive.E) C) and D)
F) B) and D)

Question 7

Tim earns income of $60,000 per year and pays $21,000 per year in taxes.Tim paid 20 percent in taxes on the first $30,000 he earned.What was the marginal tax rate on the second $30,000 he earned?

Accepted Answer

A)   20 percent
B)   30 percent
C)   50 percent
D)   70 percentE) A) and B)
F) A) and C)

Question 8

Which of the following is true about the percent of total income all levels of government in the U.S.take as taxes?

Accepted Answer

A)   In 1902 the government collected about 7 percent of total income.In recent years,it collected about 30 percent of total income.
B)   In 1902 the government collected about 30 percent of total income.In recent years,it collected about 7 percent of total income.
C)   In 1902 the government collected about 7 percent of total income.In recent years,it collected about 7 percent of total income.
D)   In 1902 the government collected about 30 percent of total income.In recent years,it collected about 30 percent of total income.E) A) and B)
F) All of the above

Question 9

A lump-sum tax minimizes deadweight loss.

Accepted Answer

A) True 
 B)False

Question 10

Which tax system requires higher-income taxpayers to pay a higher percentage of their income in taxes?

Accepted Answer

A)   A progressive tax
B)   A proportional tax
C)   A regressive tax
D)   A lump-sum taxE) All of the above
F) A) and C)

Question 11

State and local governments

Accepted Answer

A)   use a mix of taxes and fees to generate revenue.
B)   are required by federal mandate to levy income taxes.
C)   are required to tax property at a standard rate set by the federal government.
D)   cannot impose state excise taxes on products that are taxed by the federal government.E) A) and D)
F) B) and C)

Question 12

Which of the following statements is correct?

Accepted Answer

A)   The U.S.federal government collected a higher percentage of income in taxes in the early 1900s than in the early 2000s.
B)   The U.S.federal government collects a higher percentage of income in taxes than many European countries,including France and Germany.
C)   The U.S.federal government collects a lower percentage of income in taxes than many developing countries,including Mexico and India.
D)   The U.S.federal government collects a similar percentage of income in taxes as Brazil and Japan.E) A) and D)
F) B) and D)

Question 13

Sales taxes generate nearly 50% of the tax revenue for state and local governments.

Accepted Answer

A) True 
 B)False

Question 14

Scenario 12-3.A taxpayer faces the following tax rates on her income:
20 percent of the first $40,000 of her income;
30 percent of all her income above $40,000.
-Refer to Scenario 12-3.The taxpayer faces

Accepted Answer

A)   an average tax rate of 22.5 percent when her income is $30,000.
B)   an average tax rate of 22.0 percent when her income is $50,000.
C)   a marginal tax rate of 10 percent when her income rises from $40,000 to $40,001.
D)   a marginal tax rate of 50 percent when her income rises from $60,000 to $60,001.E) C) and D)
F) A) and B)

Question 15

Stacy places a $20 value on a bottle of wine,and Andrea places a $17 value on it.The equilibrium price for a bottle of wine is $15.How much total consumer surplus do Stacy and Andrea get when each purchases a bottle of wine?

Accepted Answer

A)   $1
B)   $2
C)   $5
D)   $7E) A) and B)
F) A) and C)

Question 16

Which of the following statements about state income taxes is correct?

Accepted Answer

A)   Some states do not tax income at all.
B)   If states tax income,they must follow federal guidelines for designing the tax structure.
C)   States are not allowed to have a higher marginal tax rate than the federal marginal tax rate.
D)   All of the above are correct.E) A) and B)
F) B) and D)

Question 17

Part of the deadweight loss from taxing labor earnings is that people

Accepted Answer

A)   will work more.
B)   will be reluctant to hire accountants to file their tax returns.
C)   with low tax liabilities will universally be worse off than under some other tax policy.
D)   will work less.E) A) and C)
F) A) and B)

Question 18

If the rich pay more in taxes than the poor,the tax system must be progressive.

Accepted Answer

A) True 
 B)False

Question 19

Over the past 100 years,as the U.S.economy's income has grown,

Accepted Answer

A)   tax rates have decreased,while tax revenues have increased.
B)   tax rates have increased,while tax revenues have decreased.
C)   both tax rates and tax revenues have increased.
D)   both tax rates and tax revenues have decreased.E) B) and D)
F) All of the above

Question 20

The claim that all citizens should make an "equal sacrifice" to support government programs is usually associated with

Accepted Answer

A)   the ability-to-pay principle.
B)   the benefits principle.
C)   efficiency arguments.
D)   regressive tax arguments.E) B) and C)
F) A) and D)

Exam 12: The Design of the Tax System

Scenario 12-3.A taxpayer faces the following tax rates on her income: 20 percent of the first $40,000 of her income; 30 percent of all her income above $40,000. -Refer to Scenario 12-3.The taxpayer faces

Correct Answer
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Stacy places a $20 value on a bottle of wine,and Andrea places a $17 value on it.The equilibrium price for a bottle of wine is $15.How much total consumer surplus do Stacy and Andrea get when each purchases a bottle of wine?

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Tim earns income of $60,000 per year and pays $21,000 per year in taxes.Tim paid 20 percent in taxes on the first $30,000 he earned.What was the marginal tax rate on the second $30,000 he earned?

Correct Answer
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Which tax system requires higher-income taxpayers to pay a higher percentage of their income in taxes?

Correct Answer
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Table 12-14 The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. -Refer to Table 12-14.Which tax schedules are regressive?

Correct Answer
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Vertical equity is not consistent with a regressive tax structure.

Correct Answer
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Sales taxes generate nearly 50% of the tax revenue for state and local governments.

Correct Answer
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Which of the following is true about the percent of total income all levels of government in the U.S.take as taxes?

Correct Answer
verified

State and local governments

Correct Answer
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The claim that all citizens should make an "equal sacrifice" to support government programs is usually associated with

Correct Answer
verified

Over the past 100 years,as the U.S.economy's income has grown,

Correct Answer
verified

Correct Answer
verified

Income taxes and property taxes generate the highest tax revenue for state and local governments.

Correct Answer
verified

Which of the following statements about state income taxes is correct?

Correct Answer
verified

Correct Answer
verified

A lump-sum tax minimizes deadweight loss.

Correct Answer
verified

Deadweight losses represent the

Correct Answer
verified

Part of the deadweight loss from taxing labor earnings is that people

Correct Answer
verified

If the rich pay more in taxes than the poor,the tax system must be progressive.

Correct Answer
verified

Exam 12: The Design of the Tax System

Scenario 12-3.A taxpayer faces the following tax rates on her income: 20 percent of the first $40,000 of her income; 30 percent of all her income above $40,000. -Refer to Scenario 12-3.The taxpayer faces

Correct AnswerverifiedShow Answer

Stacy places a $20 value on a bottle of wine,and Andrea places a $17 value on it.The equilibrium price for a bottle of wine is $15.How much total consumer surplus do Stacy and Andrea get when each purchases a bottle of wine?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Tim earns income of $60,000 per year and pays $21,000 per year in taxes.Tim paid 20 percent in taxes on the first $30,000 he earned.What was the marginal tax rate on the second $30,000 he earned?

Correct AnswerverifiedShow Answer

Which tax system requires higher-income taxpayers to pay a higher percentage of their income in taxes?

Correct AnswerverifiedShow Answer

Table 12-14 The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. -Refer to Table 12-14.Which tax schedules are regressive?

Correct AnswerverifiedShow Answer

Vertical equity is not consistent with a regressive tax structure.

Correct AnswerverifiedShow Answer

Sales taxes generate nearly 50% of the tax revenue for state and local governments.

Correct AnswerverifiedShow Answer

Which of the following is true about the percent of total income all levels of government in the U.S.take as taxes?

Correct AnswerverifiedShow Answer

State and local governments

Correct AnswerverifiedShow Answer

The claim that all citizens should make an "equal sacrifice" to support government programs is usually associated with

Correct AnswerverifiedShow Answer

Over the past 100 years,as the U.S.economy's income has grown,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Income taxes and property taxes generate the highest tax revenue for state and local governments.

Correct AnswerverifiedShow Answer

Which of the following statements about state income taxes is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A lump-sum tax minimizes deadweight loss.

Correct AnswerverifiedShow Answer

Deadweight losses represent the

Correct AnswerverifiedShow Answer

Part of the deadweight loss from taxing labor earnings is that people

Correct AnswerverifiedShow Answer

If the rich pay more in taxes than the poor,the tax system must be progressive.

Correct AnswerverifiedShow Answer

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