Question 1

The deadweight loss associated with a tax on a commodity is generated by

Accepted Answer

A)  the consumers who still choose to consume the commodity but pay a higher price that reflects the tax.
B)  the consumers who choose to not consume the commodity that is taxed.
C)  all citizens who are able to use services provided by government.
D)  the consumers who are unable to avoid paying the tax.E) None of the above
F) A) and B)

Question 2

With a lump-sum tax, the

Accepted Answer

A)  marginal tax rate is always less than the average tax rate.
B)  average tax rate is always less than the marginal tax rate.
C)  marginal tax rate falls as income rises.
D)  marginal tax rate rises as income rises.E) A) and D)
F) A) and C)

Question 3

Table 12-7
The following table shows the marginal tax rates for unmarried individuals for two years. 
-Refer to Table 12-7. For an individual who earned $80,000 in both years, which of the following statements is true regarding the individual's marginal tax rate?

Accepted Answer

A)  The marginal tax rate is higher in 2010 than in 2009.
B)  The marginal tax rate is the same in 2010 as it was in 2009.
C)  The marginal tax rate is lower in 2010 than in 2009.
D)  With a proportional tax, as in 2010, it is not possible to determine the individual's marginal tax rate so it is not possible to compare the marginal tax rates in the two years.E) A) and B)
F) A) and C)

Question 4

Some colleges charge all students the same fee for access to campus computing services. Suppose that students differ by how many hours of campus computing services they use. For example, some students print all their papers and assignment in the campus computer labs, while others use their own printers in their apartments. The computing services fee is most like a(n)

Accepted Answer

A)  excise tax that conforms to the benefits principle.
B)  excise tax that violates the benefits principle.
C)  lump-sum tax that conforms to the benefits principle.
D)  lump-sum tax that violates the benefits principle.E) B) and C)
F) A) and D)

Question 5

If transfer payments are included when evaluating tax burdens, then the average tax rate of the poorest quintile of taxpayers would be approximately

Accepted Answer

A)  negative 30 percent.
B)  negative 10 percent.
C)  positive 1 percent.
D)  positive 8 percent.E) A) and B)
F) None of the above

Question 6

When taxes are imposed on a commodity,

Accepted Answer

A)  there is never a deadweight loss.
B)  some consumers alter their consumption by not purchasing the taxed commodity.
C)  tax revenue will rise by the amount of the tax multiplied by the before-tax level of consumption.
D)  the taxes do not distort incentives.E) C) and D)
F) None of the above

Question 7

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) B) and D)
F) None of the above

Question 8

Resources devoted to complying with the tax laws are a type of deadweight loss.

Accepted Answer

A) True 
 B)False

Question 9

Pat calculates that for every extra dollar she earns, she owes the government 33 cents. Her total income now is $35,000, on which she pays taxes of $7,000. Determine her average tax rate and her marginal tax rate.

Accepted Answer

A)  Her average tax rate is 33 percent and her marginal tax rate is 20 percent.
B)  Her average tax rate is 20 percent and her marginal tax rate is 33 percent.
C)  Her average tax rate is 20 percent and her marginal tax rate is 20 percent.
D)  Her average tax rate is 33 percent and her marginal tax rate is 33 percent.E) A) and B)
F) All of the above

Question 10

Table 12-11 
-Refer to Table 12-11. If Peggy has taxable income of $43,000, her tax liability is

Accepted Answer

A)  $1,920.
B)  $4,400.
C)  $6,320.
D)  $8,175.E) A) and C)
F) A) and B)

Question 11

A country is using a proportional tax when

Accepted Answer

A)  its marginal tax rate equals its average tax rate.
B)  its marginal tax rate is less than its average tax rate.
C)  its marginal tax rate is greater than its average tax rate.
D)  it uses a lump-sum tax.E) B) and C)
F) All of the above

Question 12

Which of the following statements is correct?

Accepted Answer

A)  Equity is more important than efficiency as a goal of the tax system.
B)  Efficiency is more important than equity as a goal of the tax system.
C)  Both equity and efficiency are important goals of the tax system.
D)  Neither equity nor efficiency is an important goal of the tax system.E) A) and C)
F) All of the above

Question 13

With a lump-sum tax,the average tax rate for high income taxpayers will be

Accepted Answer

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

Question 14

The benefits principle is used to justify

Accepted Answer

A)  sales taxes.
B)  gasoline taxes.
C)  "sin" taxes on cigarettes and alcoholic beverages.
D)  personal income taxes.E) B) and C)
F) All of the above

Question 15

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 B 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 16

The largest category of expenditures for state and local governments is __________.

Accepted Answer

The answer of The largest category of expenditures for state...

Question 17

The U.S. income tax

Accepted Answer

A)  discourages saving.
B)  encourages saving.
C)  has no effect on saving.
D)  will reduce the administrative burden of taxation.E) B) and D)
F) A) and D)

Question 18

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) None of the above
F) A) and B)

Question 19

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013. 
-Refer to Table 12-9. Samantha is a single person whose taxable income is $100,000 a year. What happened to her average 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) A) and B)
F) A) and C)

Question 20

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) None of the above

Exam 12: The Design of the Tax System

Table 12-11 -Refer to Table 12-11. If Peggy has taxable income of $43,000, her tax liability is

Correct Answer
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Resources devoted to complying with the tax laws are a type of deadweight loss.

Correct Answer
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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
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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 B exhibits

Correct Answer
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The deadweight loss associated with a tax on a commodity is generated by

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 of the following statements is correct?

Correct Answer
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With a lump-sum tax,the average tax rate for high income taxpayers will be

Correct Answer
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The U.S. income tax

Correct Answer
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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
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Pat calculates that for every extra dollar she earns, she owes the government 33 cents. Her total income now is $35,000, on which she pays taxes of $7,000. Determine her average tax rate and her marginal tax rate.

Correct Answer
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A country is using a proportional tax when

Correct Answer
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If transfer payments are included when evaluating tax burdens, then the average tax rate of the poorest quintile of taxpayers would be approximately

Correct Answer
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The largest category of expenditures for state and local governments is __________.

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

Correct Answer
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Table 12-7 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-7. For an individual who earned $80,000 in both years, which of the following statements is true regarding the individual's marginal tax rate?

Correct Answer
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The benefits principle is used to justify

Correct Answer
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With a lump-sum tax, the

Correct Answer
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When taxes are imposed on a commodity,

Correct Answer
verified

Exam 12: The Design of the Tax System

Table 12-11 -Refer to Table 12-11. If Peggy has taxable income of $43,000, her tax liability is

Correct AnswerverifiedShow Answer

Resources devoted to complying with the tax laws are a type of deadweight loss.

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

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 B exhibits

Correct AnswerverifiedShow Answer

The deadweight loss associated with a tax on a commodity is generated by

Correct AnswerverifiedShow Answer

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 of the following statements is correct?

Correct AnswerverifiedShow Answer

With a lump-sum tax,the average tax rate for high income taxpayers will be

Correct AnswerverifiedShow Answer

The U.S. income tax

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

Pat calculates that for every extra dollar she earns, she owes the government 33 cents. Her total income now is $35,000, on which she pays taxes of $7,000. Determine her average tax rate and her marginal tax rate.

Correct AnswerverifiedShow Answer

A country is using a proportional tax when

Correct AnswerverifiedShow Answer

If transfer payments are included when evaluating tax burdens, then the average tax rate of the poorest quintile of taxpayers would be approximately

Correct AnswerverifiedShow Answer

The largest category of expenditures for state and local governments is __________.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 12-7 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-7. For an individual who earned $80,000 in both years, which of the following statements is true regarding the individual's marginal tax rate?

Correct AnswerverifiedShow Answer

The benefits principle is used to justify

Correct AnswerverifiedShow Answer

With a lump-sum tax, the

Correct AnswerverifiedShow Answer

When taxes are imposed on a commodity,

Correct AnswerverifiedShow Answer

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