Question 1

In choosing the form of a tax, there is often a tradeoff between

Accepted Answer

A)   allocative and productive efficiency.
B)   profits and revenues.
C)   efficiency and fairness.
D)   fairness and profits.E) A) and C)
F) B) and C)

Question 2

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 is her average tax rate in 2013?

Accepted Answer

A)   24.1%
B)   26.4%
C)   27.8%
D)   30.9%E) A) and D)
F) A) and C)

Question 3

Suppose the government taxes 30 percent of the first $70,000 and 50 percent of all income above $70,000. For a person earning $200,000, the marginal tax rate is

Accepted Answer

A)   30 percent, and the average tax rate is 50 percent.
B)   30 percent, and the average tax rate is 43 percent.
C)   50 percent, and the average tax rate is 40 percent.
D)   50 percent, and the average tax rate is 43 percent.E) None of the above
F) A) and B)

Question 4

Suppose Luke values a scoop of Italian gelato at $4. Leia values a scoop of Italian gelato at $6. The pre-tax price of a scoop of Italian gelato is $2. The government imposes a "fat tax" of $3 on each scoop of Italian gelato, and the price rises to $5. The deadweight loss from the tax is

Accepted Answer

A)   $1.
B)   $2.
C)   $3.
D)   $4.E) None of the above
F) All of the above

Question 5

Table 12-18
United States Income Tax Rates for a Single Individual, 2009 and 2010.
 
-Refer to Table 12-18. What type of tax structure did the United States have in 2009 for single individuals?

Accepted Answer

A)   a proportional tax structure
B)   a regressive tax structure
C)   a progressive tax structure
D)   a lump-sum tax structureE) A) and B)
F) C) and D)

Question 6

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. Suppose the government levies a tax of $3 on each cigar, and the equilibrium price of a cigar increases to $18. Because total consumer surplus has

Accepted Answer

A)   fallen by more than the tax revenue, the tax has a deadweight loss
B)   fallen by less than the tax revenue, the tax has no dead weight loss.
C)   fallen by exactly the amount of the tax revenue, the tax has no deadweight loss.
D)   increased by less than the tax revenue, the tax has a deadweight loss.E) A) and D)
F) All of the above

Question 7

Public schools, which educate most students through high school, are paid for primarily by

Accepted Answer

A)   state governments.
B)   local governments.
C)   the federal government.
D)   taxpayers directly.E) A) and C)
F) None of the above

Question 8

If a poor family has three children in public school and a rich family has two children in private school, the benefits principle would suggest that

Accepted Answer

A)   the poor family should pay more in taxes to pay for public education than the rich family.
B)   the rich family should pay more in taxes to pay for public education than the poor family.
C)   the benefits of private school exceed those of public school.
D)   public schools should be financed by property taxes.E) B) and C)
F) B) and D)

Question 9

The amount of income tax owed by a family is

Accepted Answer

A)   not simply proportional to its total income.
B)   unaffected by deductions.
C)   total income minus tax credits.
D)   a constant fraction of income.E) All of the above
F) A) and B)

Question 10

Which of the following is a characteristic of a more efficient tax system?

Accepted Answer

A)   The system minimizes deadweight loss.
B)   The system raises the same amount of revenue at a lower cost.
C)   The system minimizes administrative burdens.
D)   All of the above are correct.E) A) and B)
F) C) and D)

Question 11

Lump-sum taxes are equitable but not efficient.

Accepted Answer

A) True 
 B)False

Question 12

"A $1,000 tax paid by a poor person may be a larger sacrifice than a $10,000 tax paid by a wealthy person" is an argument in favor of

Accepted Answer

A)   the horizontal equity principle.
B)   the benefits principle.
C)   a regressive tax argument.
D)   the ability-to-pay principle.E) B) and D)
F) None of the above

Question 13

The ability-to-pay principle claims that a person should pay taxes according to

Accepted Answer

A)   the level of public education that the person has received throughout his lifetime.
B)   how many government services that person will receive.
C)   how well that person can shoulder the tax burden.
D)   the level of debt that the person has.E) C) and D)
F) All of the above

Question 14

Who pays a corporate income tax?

Accepted Answer

A)   owners of the corporation
B)   customers of the corporation
C)   workers of the corporation
D)   All of the above are correct.E) All of the above
F) None of the above

Question 15

In 2011, the largest source of receipts for state and local governments was individual income taxes.

Accepted Answer

A) True 
 B)False

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) B) and C)
F) C) and D)

Question 17

From 1950 to today, government spending on Social Security, Medicare, and Medicaid as a percentage of GDP has

Accepted Answer

A)   decreased from about ten percent to less than one percent.
B)   increased from less than one percent to about ten percent.
C)   remained constant at less than one percent.
D)   remained constant at about ten percent.E) A) and B)
F) A) and C)

Question 18

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 D)
F) A) and B)

Question 19

Which tax system requires higher-income taxpayers to have lower tax rates, even though they pay a larger amount of tax when compared to lower-income taxpayers?

Accepted Answer

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

Question 20

A tax system with little deadweight loss and a small administrative burden would be described as

Accepted Answer

A)   equitable.
B)   communistic.
C)   capitalistic.
D)   efficient.E) A) and B)
F) A) and C)

Exam 12: The Design of the Tax System

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 is her average tax rate in 2013?

Correct Answer
verified

In choosing the form of a tax, there is often a tradeoff between

Correct Answer
verified

A tax system with little deadweight loss and a small administrative burden would be described as

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 $1,000 tax paid by a poor person may be a larger sacrifice than a $10,000 tax paid by a wealthy person" is an argument in favor of

Correct Answer
verified

If a poor family has three children in public school and a rich family has two children in private school, the benefits principle would suggest that

Correct Answer
verified

A country is using a proportional tax when

Correct Answer
verified

Suppose Luke values a scoop of Italian gelato at $4. Leia values a scoop of Italian gelato at $6. The pre-tax price of a scoop of Italian gelato is $2. The government imposes a "fat tax" of $3 on each scoop of Italian gelato, and the price rises to $5. The deadweight loss from the tax is

Correct Answer
verified

In 2011, the largest source of receipts for state and local governments was individual income taxes.

Correct Answer
verified

Table 12-18 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-18. What type of tax structure did the United States have in 2009 for single individuals?

Correct Answer
verified

The ability-to-pay principle claims that a person should pay taxes according to

Correct Answer
verified

Which tax system requires higher-income taxpayers to have lower tax rates, even though they pay a larger amount of tax when compared to lower-income taxpayers?

Correct Answer
verified

Suppose the government taxes 30 percent of the first $70,000 and 50 percent of all income above $70,000. For a person earning $200,000, the marginal tax rate is

Correct Answer
verified

Correct Answer
verified

Public schools, which educate most students through high school, are paid for primarily by

Correct Answer
verified

Lump-sum taxes are equitable but not efficient.

Correct Answer
verified

Who pays a corporate income tax?

Correct Answer
verified

The amount of income tax owed by a family is

Correct Answer
verified

From 1950 to today, government spending on Social Security, Medicare, and Medicaid as a percentage of GDP has

Correct Answer
verified

Which of the following is a characteristic of a more efficient tax system?

Correct Answer
verified

Exam 12: The Design of the Tax System

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 is her average tax rate in 2013?

Correct AnswerverifiedShow Answer

In choosing the form of a tax, there is often a tradeoff between

Correct AnswerverifiedShow Answer

A tax system with little deadweight loss and a small administrative burden would be described as

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 $1,000 tax paid by a poor person may be a larger sacrifice than a $10,000 tax paid by a wealthy person" is an argument in favor of

Correct AnswerverifiedShow Answer

If a poor family has three children in public school and a rich family has two children in private school, the benefits principle would suggest that

Correct AnswerverifiedShow Answer

A country is using a proportional tax when

Correct AnswerverifiedShow Answer

Suppose Luke values a scoop of Italian gelato at $4. Leia values a scoop of Italian gelato at $6. The pre-tax price of a scoop of Italian gelato is $2. The government imposes a "fat tax" of $3 on each scoop of Italian gelato, and the price rises to $5. The deadweight loss from the tax is

Correct AnswerverifiedShow Answer

In 2011, the largest source of receipts for state and local governments was individual income taxes.

Correct AnswerverifiedShow Answer

Table 12-18 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-18. What type of tax structure did the United States have in 2009 for single individuals?

Correct AnswerverifiedShow Answer

The ability-to-pay principle claims that a person should pay taxes according to

Correct AnswerverifiedShow Answer

Which tax system requires higher-income taxpayers to have lower tax rates, even though they pay a larger amount of tax when compared to lower-income taxpayers?

Correct AnswerverifiedShow Answer

Suppose the government taxes 30 percent of the first $70,000 and 50 percent of all income above $70,000. For a person earning $200,000, the marginal tax rate is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Public schools, which educate most students through high school, are paid for primarily by

Correct AnswerverifiedShow Answer

Lump-sum taxes are equitable but not efficient.

Correct AnswerverifiedShow Answer

Who pays a corporate income tax?

Correct AnswerverifiedShow Answer

The amount of income tax owed by a family is

Correct AnswerverifiedShow Answer

From 1950 to today, government spending on Social Security, Medicare, and Medicaid as a percentage of GDP has

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of a more efficient tax system?

Correct AnswerverifiedShow Answer

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