Question 1

Briefly describe why taxes create deadweight loss.

Accepted Answer

When the government imposes a ...

Question 2

What is the most efficient tax and why?

Accepted Answer

A lump-sum tax is the most eff...

Question 3

Suppose that Deon places a $150 value on a new MP-3 player, and Juanita places a $140 value on it. The cost of the MP-3 player is $130. Suppose the government levies a $15 tax on MP-3 players, which raises the price to $145. What is the deadweight loss created by the tax?

Accepted Answer

Before the tax, the total surplus was $3...

Question 4

In 2011, the U.S. federal government collected approximately how much in total tax receipts?

Accepted Answer

A)   $800 million
B)   $2.5 billion
C)   $5.2 billion
D)   $8.7 billionE) A) and B)
F) A) and C)

Question 5

Which of the following countries has the largest tax burden?

Accepted Answer

A)   Mexico
B)   Canada
C)   United States
D)   DenmarkE) C) and D)
F) B) and D)

Question 6

In 2009, the lowest quintile of income earners paid about

Accepted Answer

A)   1 percent of income as taxes and paid less than 1 percent of all taxes.
B)   5 percent of income as taxes and paid less than 1 percent of all taxes.
C)   1 percent of income as taxes and paid about 5 percent of all taxes.
D)   5 percent of income as taxes and paid about 5 percent of all taxes.E) A) and B)
F) C) and D)

Question 7

In the 1980s, President Ronald Reagan argued that high tax rates distorted economic incentives to work and save. In the 1990s, President Bill Clinton argued that the rich were not paying their fair share of taxes. Which of the following statements best summarizes the economic theories behind the differing philosophies?

Accepted Answer

A)   President Reagan was concerned about vertical equity, whereas President Clinton was concerned about horizontal equity.
B)   President Reagan was concerned about average tax rates, whereas President Clinton was concerned about horizontal equity.
C)   President Reagan was concerned about marginal tax rates, whereas President Clinton was concerned about vertical equity.
D)   None of the above is correct.E) B) and D)
F) A) and C)

Question 8

Table 12-16
 
-Refer to Table 12-16. The tax system is

Accepted Answer

A)   proportional.
B)   regressive.
C)   progressive.
D)   lump sum.E) All of the above
F) C) and D)

Question 9

Define the marginal tax rate.

Accepted Answer

The marginal tax rat...

Question 10

The government raises revenue through taxation to pay for the services it provides.

Accepted Answer

A) True 
 B)False

Question 11

Table 12-25
 
-Refer to Table 12-25. Which plan represents the best tax?

Accepted Answer

The best tax depends on the criteria. Pl...

Question 12

A consumption tax is a tax on

Accepted Answer

A)   goods but not on services.
B)   the amount of income that people spend.
C)   the amount of income that people earn.
D)   the amount of income that people save.E) A) and D)
F) A) and B)

Question 13

Table 12-5
 
-Refer to Table 12-5. What is the average tax rate for a person who makes $120,000?

Accepted Answer

A)   25%
B)   35%
C)   45%
D)   60%E) B) and C)
F) C) and D)

Question 14

Under a regressive tax system, the marginal tax rate for high income taxpayers is

Accepted Answer

A)   higher than the marginal tax rate for low income taxpayers.
B)   the same as the marginal tax rate for low income taxpayers.
C)   lower than the marginal tax rate for low income taxpayers.
D)   Any of the above could be true under a regressive tax system.E) B) and C)
F) B) and D)

Question 15

The payroll tax differs from the individual income tax because the payroll tax is primarily earmarked to pay for

Accepted Answer

A)   employer-provided pensions.
B)   Social Security and Medicare.
C)   employer-provided health benefits.
D)   job loss and training programs.E) None of the above
F) B) and C)

Question 16

Suppose Tyler values a basketball at $20. Jacqui values a basketball at $16. The pre-tax price of a basketball $15.The government imposes a tax of $2 on each basketball, and the price rises to $17. The deadweight loss from the tax is

Accepted Answer

A)   $1.
B)   $2.
C)   $3.
D)   $6.E) A) and B)
F) None of the above

Question 17

Table 12-10
 
-Refer to Table 12-10. If Willie has $170,000 in taxable income, his marginal tax rate is

Accepted Answer

A)   25%.
B)   28%.
C)   33%.
D)   35%.E) B) and C)
F) B) and D)

Question 18

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.
 
-Refer to Table 12-9. Ruby Sue is a single person whose taxable income is $100,000 a year. What happened to her marginal tax rate between 2012 and 2013?

Accepted Answer

A)   It increased.
B)   It decreased.
C)   It did not change.
D)   We do not have enough information to answer this question.E) C) and D)
F) B) and D)

Question 19

A tax on the wages that a firm pays its workers is called

Accepted Answer

A)   an income tax.
B)   an excise tax.
C)   a consumption tax.
D)   a payroll tax.E) All of the above
F) B) and D)

Question 20

Scenario 12-3
Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $8 for it. Roger would be willing to pay $11 for his first slice,$9 for his second slice, and $5 for his third slice. The current market price is $5 per slice.
-Refer to Scenario 12-3. Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $9. What is Regina's consumer surplus from cheesecake?

Accepted Answer

A)   zero
B)   $2
C)   $3
D)   $6E) A) and B)
F) C) and D)

Exam 12: The Design of the Tax System

What is the most efficient tax and why?

Correct Answer
verified
A lump-sum tax is the most eff...
View Answer

A consumption tax is a tax on

Correct Answer
verified

A tax on the wages that a firm pays its workers is called

Correct Answer
verified

The government raises revenue through taxation to pay for the services it provides.

Correct Answer
verified

Suppose Tyler values a basketball at $20. Jacqui values a basketball at $16. The pre-tax price of a basketball $15.The government imposes a tax of $2 on each basketball, and the price rises to $17. The deadweight loss from the tax is

Correct Answer
verified

Define the marginal tax rate.

Correct Answer
verified
The marginal tax rat...
View Answer

In 2011, the U.S. federal government collected approximately how much in total tax receipts?

Correct Answer
verified

Correct Answer
verified

Table 12-25 -Refer to Table 12-25. Which plan represents the best tax?

Correct Answer
verified
The best tax depends on the criteria. Pl...
View Answer

Briefly describe why taxes create deadweight loss.

Correct Answer
verified
When the government imposes a ...
View Answer

Correct Answer
verified

The payroll tax differs from the individual income tax because the payroll tax is primarily earmarked to pay for

Correct Answer
verified

In 2009, the lowest quintile of income earners paid about

Correct Answer
verified

Table 12-16 -Refer to Table 12-16. The tax system is

Correct Answer
verified

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Ruby Sue is a single person whose taxable income is $100,000 a year. What happened to her marginal tax rate between 2012 and 2013?

Correct Answer
verified

Under a regressive tax system, the marginal tax rate for high income taxpayers is

Correct Answer
verified

Table 12-10 -Refer to Table 12-10. If Willie has $170,000 in taxable income, his marginal tax rate is

Correct Answer
verified

Table 12-5 -Refer to Table 12-5. What is the average tax rate for a person who makes $120,000?

Correct Answer
verified

Suppose that Deon places a $150 value on a new MP-3 player, and Juanita places a $140 value on it. The cost of the MP-3 player is $130. Suppose the government levies a $15 tax on MP-3 players, which raises the price to $145. What is the deadweight loss created by the tax?

Correct Answer
verified
Before the tax, the total surplus was $3...
View Answer

Which of the following countries has the largest tax burden?

Correct Answer
verified

Exam 12: The Design of the Tax System

What is the most efficient tax and why?

Correct AnswerverifiedA lump-sum tax is the most eff...View AnswerShow Answer

A consumption tax is a tax on

Correct AnswerverifiedShow Answer

A tax on the wages that a firm pays its workers is called

Correct AnswerverifiedShow Answer

The government raises revenue through taxation to pay for the services it provides.

Correct AnswerverifiedShow Answer

Suppose Tyler values a basketball at $20. Jacqui values a basketball at $16. The pre-tax price of a basketball $15.The government imposes a tax of $2 on each basketball, and the price rises to $17. The deadweight loss from the tax is

Correct AnswerverifiedShow Answer

Define the marginal tax rate.

Correct AnswerverifiedThe marginal tax rat...View AnswerShow Answer

In 2011, the U.S. federal government collected approximately how much in total tax receipts?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-25 -Refer to Table 12-25. Which plan represents the best tax?

Correct AnswerverifiedThe best tax depends on the criteria. Pl...View AnswerShow Answer

Briefly describe why taxes create deadweight loss.

Correct AnswerverifiedWhen the government imposes a ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

The payroll tax differs from the individual income tax because the payroll tax is primarily earmarked to pay for

Correct AnswerverifiedShow Answer

In 2009, the lowest quintile of income earners paid about

Correct AnswerverifiedShow Answer

Table 12-16 -Refer to Table 12-16. The tax system is

Correct AnswerverifiedShow Answer

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Ruby Sue is a single person whose taxable income is $100,000 a year. What happened to her marginal tax rate between 2012 and 2013?

Correct AnswerverifiedShow Answer

Under a regressive tax system, the marginal tax rate for high income taxpayers is

Correct AnswerverifiedShow Answer

Table 12-10 -Refer to Table 12-10. If Willie has $170,000 in taxable income, his marginal tax rate is

Correct AnswerverifiedShow Answer

Table 12-5 -Refer to Table 12-5. What is the average tax rate for a person who makes $120,000?

Correct AnswerverifiedShow Answer

Suppose that Deon places a $150 value on a new MP-3 player, and Juanita places a $140 value on it. The cost of the MP-3 player is $130. Suppose the government levies a $15 tax on MP-3 players, which raises the price to $145. What is the deadweight loss created by the tax?

Correct AnswerverifiedBefore the tax, the total surplus was $3...View AnswerShow Answer

Which of the following countries has the largest tax burden?

Correct AnswerverifiedShow Answer

Correct Answer
verified
A lump-sum tax is the most eff...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The marginal tax rat...
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
The best tax depends on the criteria. Pl...
View Answer

Correct Answer
verified
When the government imposes a ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Before the tax, the total surplus was $3...
View Answer

Correct Answer
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