Question 1

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. How much consumer surplus does Regina receive from consuming her slice of cheesecake?

Accepted Answer

A)   $3
B)   $5
C)   $9 d
D)   . $12E) B) and C)
F) A) and D)

Question 2

If your income is $40,000 and your income tax liability is $5,000, your

Accepted Answer

A)   marginal tax rate is 8 percent.
B)   average tax rate is 8 percent.
C)   marginal tax rate is 12.5 percent.
D)   average tax rate is 12.5 percent.E) All of the above
F) None of the above

Question 3

An advantage of a consumption tax over the present tax system is that a consumption tax

Accepted Answer

A)   raises more revenues.
B)   would save the government millions in administrative costs.
C)   places more of the tax burden on the wealthy.
D)   does not discourage saving.E) A) and D)
F) B) and D)

Question 4

The administrative burden of complying with tax laws is a cost to the government but not to taxpayers.

Accepted Answer

A) True 
 B)False

Question 5

Suppose the government taxes 25 percent of the first $60,000 of income and 40 percent of all income above $60,000. For a person earning $200,000, the marginal tax rate is

Accepted Answer

A)   25 percent, and the average tax rate is 32.5 percent.
B)   25 percent, and the average tax rate is 36 percent.
C)   40 percent, and the average tax rate is 32.5 percent.
D)   40 percent, and the average tax rate is 36 percent.E) A) and D)
F) A) and B)

Question 6

The federal healthcare spending program that specifically targets the poor is called

Accepted Answer

A)   Medicaid.
B)   Medicare.
C)   National Institutes of Health.
D)   Blue Cross/Blue Shield.E) B) and D)
F) A) and D)

Question 7

Table 12-15 
-Refer to Table 12-15. In this tax system which of the following is possible?

Accepted Answer

A)   vertical and horizontal equity
B)   vertical but not horizontal equity
C)   horizontal but not vertical equity
D)   neither horizontal nor vertical equityE) B) and C)
F) None of the above

Question 8

Sue earns income of $80,000 per year. Her average tax rate is 50 percent. Sue paid $5,000 in taxes on the first $30,000 she earned. What was the marginal tax rate on the first $30,000 she earned, and what was the marginal tax rate on the remaining $50,000?

Accepted Answer

A)   6.25 percent and 50.00 percent, respectively
B)   10.00 percent and 70.00 percent, respectively
C)   16.67 percent and 60.00 percent, respectively
D)   16.67 percent and 70.00 percent, respectivelyE) A) and D)
F) A) and C)

Question 9

Table 12-17
The following table shows the marginal tax rates for unmarried individuals for two years.
2009 2010 
-Refer to Table 12-17. Which of the following best describes the tax schedule in 2009?

Accepted Answer

A)   proportional tax
B)   progressive tax
C)   regressive tax
D)   vertical taxE) B) and D)
F) B) and C)

Question 10

A tax levied on the total amount spent in retail stores is called

Accepted Answer

A)   a sales tax.
B)   an excise tax.
C)   a retail tax.
D)   an income tax.E) A) and B)
F) None of the above

Question 11

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) None of the above
F) All of the above

Question 12

Scenario 12-1
Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15.
-Refer to Scenario 12-1. How much total consumer surplus do Ken and Mark get when each purchases one cigar?

Accepted Answer

A)   $1
B)   $2
C)   $5
D)   $7E) None of the above
F) B) and C)

Question 13

Table 12-13
The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes. 
-Refer to Table 12-13. In this economy Tax C exhibits

Accepted Answer

A)   horizontal and vertical equity.
B)   horizontal equity but not vertical equity.
C)   vertical equity but not horizontal equity.
D)   neither horizontal nor vertical equity.E) A) and C)
F) A) and B)

Question 14

Tax incidence refers to

Accepted Answer

A)   what product or service the tax is levied on.
B)   who bears the tax burden.
C)   what sector of the economy is most affected by the tax.
D)   the dollar value of the tax revenues.E) C) and D)
F) None of the above

Question 15

A family's income tax liability is

Accepted Answer

A)   a standard percentage of all income earned.
B)   determined by wage income rather than dividend and interest income.
C)   based on total income.
D)   constant from year to year.E) None of the above
F) A) and B)

Question 16

Suppose Max values a concert ticket at $45. Charles values the same concert ticket at $40. The pre-tax price of a concert ticket is $30. The government imposes a tax of $5 on each concert ticket, and the price rises to $35. The deadweight loss from the tax is

Accepted Answer

A)   $15.
B)   $10.
C)   $5.
D)   $0.E) A) and C)
F) B) and D)

Question 17

The marginal tax rate for an unmarried taxpayer in the highest taxable income category for 2013 is approximately

Accepted Answer

A)   80 percent.
B)   50 percent.
C)   40 percent.
D)   20 percent.E) A) and D)
F) A) and B)

Question 18

Lump-sum taxes are equitable but not efficient.

Accepted Answer

A) True 
 B)False

Question 19

Briefly describe the tradeoff between equity and efficiency of tax systems using a few examples.

Accepted Answer

Although most Americans agree that equit...

Question 20

Which of the following statements is correct?

Accepted Answer

A)   National defense and health are the two largest spending categories for the federal government.
B)   Welfare programs and highways are the two largest spending categories for state and local governments.
C)   Sales taxes and property taxes are the two most important revenue sources for state and local governments.
D)   Corporate income taxes are the largest source of revenue for the federal government.E) B) and C)
F) A) and B)

Exam 12: The Design of the Tax System

Lump-sum taxes are equitable but not efficient.

Correct Answer
verified

A family's income tax liability is

Correct Answer
verified

The marginal tax rate for an unmarried taxpayer in the highest taxable income category for 2013 is approximately

Correct Answer
verified

An advantage of a consumption tax over the present tax system is that a consumption tax

Correct Answer
verified

The administrative burden of complying with tax laws is a cost to the government but not to taxpayers.

Correct Answer
verified

Sue earns income of $80,000 per year. Her average tax rate is 50 percent. Sue paid $5,000 in taxes on the first $30,000 she earned. What was the marginal tax rate on the first $30,000 she earned, and what was the marginal tax rate on the remaining $50,000?

Correct Answer
verified

Table 12-13 The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes. -Refer to Table 12-13. In this economy Tax C exhibits

Correct Answer
verified

Which of the following statements is correct?

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 Max values a concert ticket at $45. Charles values the same concert ticket at $40. The pre-tax price of a concert ticket is $30. The government imposes a tax of $5 on each concert ticket, and the price rises to $35. The deadweight loss from the tax is

Correct Answer
verified

A tax levied on the total amount spent in retail stores is called

Correct Answer
verified

Briefly describe the tradeoff between equity and efficiency of tax systems using a few examples.

Correct Answer
verified
Although most Americans agree that equit...
View Answer

Table 12-15 -Refer to Table 12-15. In this tax system which of the following is possible?

Correct Answer
verified

Correct Answer
verified

Table 12-17 The following table shows the marginal tax rates for unmarried individuals for two years. 2009 2010 -Refer to Table 12-17. Which of the following best describes the tax schedule in 2009?

Correct Answer
verified

The federal healthcare spending program that specifically targets the poor is called

Correct Answer
verified

Tax incidence refers to

Correct Answer
verified

Suppose the government taxes 25 percent of the first $60,000 of income and 40 percent of all income above $60,000. For a person earning $200,000, the marginal tax rate is

Correct Answer
verified

Scenario 12-1 Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15. -Refer to Scenario 12-1. How much total consumer surplus do Ken and Mark get when each purchases one cigar?

Correct Answer
verified

If your income is $40,000 and your income tax liability is $5,000, your

Correct Answer
verified

Exam 12: The Design of the Tax System

Lump-sum taxes are equitable but not efficient.

Correct AnswerverifiedShow Answer

A family's income tax liability is

Correct AnswerverifiedShow Answer

The marginal tax rate for an unmarried taxpayer in the highest taxable income category for 2013 is approximately

Correct AnswerverifiedShow Answer

An advantage of a consumption tax over the present tax system is that a consumption tax

Correct AnswerverifiedShow Answer

The administrative burden of complying with tax laws is a cost to the government but not to taxpayers.

Correct AnswerverifiedShow Answer

Sue earns income of $80,000 per year. Her average tax rate is 50 percent. Sue paid $5,000 in taxes on the first $30,000 she earned. What was the marginal tax rate on the first $30,000 she earned, and what was the marginal tax rate on the remaining $50,000?

Correct AnswerverifiedShow Answer

Table 12-13 The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes. -Refer to Table 12-13. In this economy Tax C exhibits

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

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 Max values a concert ticket at $45. Charles values the same concert ticket at $40. The pre-tax price of a concert ticket is $30. The government imposes a tax of $5 on each concert ticket, and the price rises to $35. The deadweight loss from the tax is

Correct AnswerverifiedShow Answer

A tax levied on the total amount spent in retail stores is called

Correct AnswerverifiedShow Answer

Briefly describe the tradeoff between equity and efficiency of tax systems using a few examples.

Correct AnswerverifiedAlthough most Americans agree that equit...View AnswerShow Answer

Table 12-15 -Refer to Table 12-15. In this tax system which of the following is possible?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-17 The following table shows the marginal tax rates for unmarried individuals for two years. 2009 2010 -Refer to Table 12-17. Which of the following best describes the tax schedule in 2009?

Correct AnswerverifiedShow Answer

The federal healthcare spending program that specifically targets the poor is called

Correct AnswerverifiedShow Answer

Tax incidence refers to

Correct AnswerverifiedShow Answer

Suppose the government taxes 25 percent of the first $60,000 of income and 40 percent of all income above $60,000. For a person earning $200,000, the marginal tax rate is

Correct AnswerverifiedShow Answer

Scenario 12-1 Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15. -Refer to Scenario 12-1. How much total consumer surplus do Ken and Mark get when each purchases one cigar?

Correct AnswerverifiedShow Answer

If your income is $40,000 and your income tax liability is $5,000, your

Correct AnswerverifiedShow 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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Although most Americans agree that equit...
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