A) the largest amount of time that can be spent at leisure. B) the maximum number of hours in a period that a person can work. C) the number of hours in a day. D) all of these answer options are correct. A) the largest amount of time that can be spent at leisure. B) the maximum number of hours in a period that a person can work. C) the number of hours in a day. D) all of these answer options are correct.

Exam 16: Efficient and Equitable Taxation

Refer to the figure below. Assume that the equation of Dx is P = 50 - 2Xd. (A)If the original price of the good was $10 and a $4 tax was imposed, what is the tax income? Wha is the excess burden? (B)How much marginal excess burden will be created if an additional dollar of tax is levied? (C)How much additional tax is collected?

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Question 1

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(A)If the original price of the good was $10 and a $4 tax was imposed, tax income is the shaded area denoted by abhj. X* with no tax can be calculated as 10 = 50 - 2X and X* = 20. If
$4 of tax is levied, then X1 = 18, then the Tax = (14 - 10)× (18)= $72, and excess burden is the shaded area denoted by abc which is equal to 4 * 2/2 = $4.
(B)If an additional tax is levied then Tax = $5, P = 15, X2 = 17.5. Marginal excess burden is the shaded area denoted by fbae which is equal to [(1/2)* (1/2)* 1 + (1/2)* 4] = $2.25
(C)Additional tax is collected is the difference between shaded area denoted by gfih and baei
which is equal to [(1 * 17.5)- (4 * 1/2)] = 15.5

"For goods that are unrelated in consumption, efficiency requires that tax rates be inversely proportional to elasticities." This is the definition of

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Question 2

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Average cost pricing is

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Question 3

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Suppose the demand for good X can be represented by the following equation: Xd = 22 - (1/4)PX. Furthermore, suppose that the demand for good Y can be represented by Yd = 50 - PY. (A)Find the elasticity of demand for both good X and good Y when the prices of both are $10. (B)Suppose that an ad valorem tax is placed on both goods. Good Y is taxed at a rate of 5%. To ensure that the inverse elasticity rule holds, what must be the rate at which good X is taxed? Reminder: Elasticity at a given price is found using the formula s = -(1/S)(P/X), where S is the slope of the demand curve, X is the quantity demanded, and P is the price.

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Question 4

Refer to the figure below. The marginal cost of underreporting can be written as MC = X2 + 0.4. (A)What is the maximum marginal tax level (t)possible that will ensure tax evasion is zero? (B)If the marginal tax rate is equal to 0.56, how much income will be evaded?

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Question 5

When the minimum marginal penalty for tax evasion is greater than the maximum marginal tax rate, theory suggests that tax evasion will be

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Question 6

Income is a poor measure of relative position when attempting to determine horizontal equity.

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Question 7

Vertical equity incorporates the notion that

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Question 8

Refer to the figure below. When the MCz line crosses the Dz line, profits for the firm are

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Question 9

Optimal user fees are paid by everyone, regardless if they are consumers of the good or service produced or not.

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Question 10

Consider a monopolist that has a total cost curve of TC = 110Q - (0.25)Q2. The market demand equation is Qd = 155 - P. (A)What are the total revenue, marginal revenue, marginal cost, equilibrium quantity, equilibrium price, and profits for the monopolist in this market? (B)Suppose the government instructs the firm to produce using average cost pricing. What are the equilibrium quantity, equilibrium price, and profits? (C)Suppose further that the government wants the firm to produce where supply equals demand. What will be the equilibrium quantity, equilibrium price, and profits?

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Question 11

People who are risk neutral are more likely to engage in tax evasion than people who are risk loving.

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Question 12

Optimal commodity taxation would

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Question 13

A time endowment is

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Question 14

Refer to the figure below. If the equation of the MC of unreported income is MC = 4 + 2X, and the MB of unreported income is MB = 44 - 3X, what will be the amount of unreported income? How much of a change will there be if enforcement becomes more strict, resulting in MC = 9 + 2X?

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Question 15

The Ramsey Rule requires that goods be in consumption.

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Question 16

Working fewer hours to reduce your tax burden is tax evasion.

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Question 17

If a tax is efficient, it will necessarily be equitable.

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Question 18

A natural monopoly has

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Question 19

Tax amnesty is when people are forgiven their tax obligations.

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Question 20

Showing 1 - 20 of 38

"For goods that are unrelated in consumption, efficiency requires that tax rates be inversely proportional to elasticities." This is the definition of

Average cost pricing is

Refer to the figure below. The marginal cost of underreporting can be written as MC = X2 + 0.4. (A)What is the maximum marginal tax level (t)possible that will ensure tax evasion is zero? (B)If the marginal tax rate is equal to 0.56, how much income will be evaded?

When the minimum marginal penalty for tax evasion is greater than the maximum marginal tax rate, theory suggests that tax evasion will be

Income is a poor measure of relative position when attempting to determine horizontal equity.

Vertical equity incorporates the notion that

Refer to the figure below. When the MCz line crosses the Dz line, profits for the firm are

Optimal user fees are paid by everyone, regardless if they are consumers of the good or service produced or not.

People who are risk neutral are more likely to engage in tax evasion than people who are risk loving.

Optimal commodity taxation would

A time endowment is

Refer to the figure below. If the equation of the MC of unreported income is MC = 4 + 2X, and the MB of unreported income is MB = 44 - 3X, what will be the amount of unreported income? How much of a change will there be if enforcement becomes more strict, resulting in MC = 9 + 2X?

The Ramsey Rule requires that goods be in consumption.

Working fewer hours to reduce your tax burden is tax evasion.

If a tax is efficient, it will necessarily be equitable.

A natural monopoly has

Tax amnesty is when people are forgiven their tax obligations.

Introduction to Public Finance in Canada

Fundamentals of Welfare Economics

Cost-Benefit Analysis

Public Goods

Externalities

Income Redistribution

Public Choice

Fiscal Federalism

Health Care

Employment Insurance

Public Pensions

Social Welfare Programs

Education

Taxation and Income Distribution

Taxation and Efficiency

The Personal Income Tax

Personal Taxation and Behaviour

Consumption Taxation

Taxes on Wealth and Property

The Corporation Tax

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