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Exam 7: Taxes

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Question 131

Multiple Choice

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Suppose the government levies a $4 per month excise tax on cable TV. If the demand for cable TV is relatively (but not perfectly) inelastic and the supply curve is relatively (but not perfectly) elastic, then the price of cable TV will:

A) increase by more than $4.
B) increase by exactly $4.
C) increase by less than $4.
D) remain constant.

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Question 132

Multiple Choice

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Use the following to answer questions Figure: The Market for Music Downloads -(Figure: The Market for Music Downloads) Look at the graph The Market for Music Downloads. If the government imposes a tax of $3 in this market, the deadweight loss will equal:

A) $0.
B) $22.50.
C) $26.25.
D) $52.50.

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Question 133

Multiple Choice

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If an excise tax is imposed on automobiles and collected from consumers:

Suppose Governor Meridias decides to initiate a state income tax. The first $50,000 of household income is tax-free, while any income above $50,000 is taxed at 10%. A household earning $50,000 has a marginal tax rate of _____ and an average tax rate of _____.

If personal income up to and including $30,000 is not taxed, income of $30,001 to $60,000 is taxed at 10%, and income over $60,000 is taxed at 25%, then a family earning an income of $100,000 will pay an AVERAGE tax rate of:

Given any upward-sloping supply curve for a good, the more elastic the demand curve, the _____ equilibrium output will fall and the _____ will be the deadweight loss when the government imposes an excise tax.

Use the following to answer questions Figure: The Market for Blue Jeans -(Figure: The Market for Blue Jeans) Look at the figure The Market for Blue Jeans. The government recently levied a $10 tax on the producers of blue jeans. What area or areas in the graph identify consumer and producer surplus after the tax was levied?

The two principles of tax fairness are:

When workers earn income, they and their employer pay equal portions of FICA (the Federal Insurance Contributions Act) . Which of the following statements is TRUE?

Use the following to answer questions Figure: The Market for Lattes -(Figure: The Market for Lattes) If an excise tax of $2.25 is assessed on each latte, government revenue will be:

Under what supply and demand conditions would an excise tax impose a large incidence on suppliers and a small incidence on consumers? Explain how this works.

Use the following to answer questions -(Table: Three Tax Structure Proposals) Look at the table Three Tax Structure Proposals. Policy makers interested in implementing a progressive tax structure would suggest using:

Use the following to answer questions Figure: The Shrimp Market -(Figure: The Shrimp Market) Look at the figure The Shrimp Market. If the government wants to limit shrimp sales to 500 pounds, it can impose a _____ excise tax on sellers, and the total tax revenue generated will be _____.

Since the terrorist attacks of September 11, 2001, the Federal Aviation Agency has added a small security fee to every airplane ticket purchased. This is an example of:

Taxes on the purchase of specific items such as gasoline, cigarettes, or alcoholic beverages are called:

If an excise tax is imposed on wine and collected from the consumers, the _____ curve will shift _____ by the amount of the tax.

If the government imposes a per-unit tax on good Y and the supply of good Y is perfectly inelastic, there will be no deadweight loss due to the tax.

Use the following to answer questions Figure: A Market with a Tax -(Figure: A Market with a Tax) Look at the figure A Market with a Tax. The deadweight loss arising from the imposition of this tax is equal to the areas:

Use the following to answer questions Figure: The Market for Lattes -(Figure: The Market for Lattes) If an excise tax of $1.50 is assessed on each latte, government revenue will be:

Use the following to answer questions Figure: Income Tax Payments -(Figure: Income Tax Payments) Look at the figure Income Tax Payments. Which panel or panels best represent the effects of a progressive income tax?