Question 1

How does an excise tax create a cost to society?

Accepted Answer

Answer
The tax drives a wedge between the price paid by consumers and the price received by producers.This wedge results in a decreased quantity of the good that is bought and sold.The difference between the untaxed equilibrium quantity and the new lower after-tax equilibrium quantity represents transactions that don't occur but that would have occurred without the tax.These lost transactions mean lost consumer and producer surplus, and this deadweight loss is the main cost of an excise tax.

Question 2

When the imposition of an excise tax causes the quantity demanded and quantity supplied to decrease, this will result in:
A.deadweight loss.
B.increases in producer surplus.
C.increases in consumer surplus.
D.increases in both consumer and producer surplus.

Accepted Answer

deadweight loss.

Question 3

If the United States removed all excise taxes on cigarettes, which of the following would not
occur?
A.Producer surplus for U.S.cigarette producers would decrease.
B.Producer surplus for U.S.cigarettes would increase.
C.Consumer surplus for U.S.cigarette consumers would increase.
D.Total surplus in the U.S.cigarette market would increase.

Accepted Answer

Producer surplus for U.S.cigarette producers would decrease.

Question 4

Paying a tax of $10 on an income of $100, a tax of $25 on an income of $200, and a tax of
$60 on an income of $300 is an example of a:
A.progressive tax.
B.proportional tax.
C.regressive tax.
D.flat tax.

Accepted Answer

The answer of Paying a tax of $10 on an...

Question 5

Assuming a normal upward-sloping supply curve and downward-sloping demand curve, if the government imposes a $5 excise tax on leather shoes and collects the tax from the suppliers, the price of leather shoes will:
A.increase by $5.
B.increase by more than $5.
C.increase by less than $5.
D.increase, but we cannot determine by how much.

Accepted Answer

increase b

Question 6

An excise tax that the government collects from the producers of a good:
A.shifts the supply curve upward.
B.causes a loss of revenue for the government.
C.has a similar effect as a tax subsidy.
D.shifts the supply curve downward.

Accepted Answer

shifts the

Question 7

U.S.federal taxes are generally , while state and local taxes are generally
________.
A.progressive; progressive
B.progressive; regressive
C.regressive; progressive
D.regressive; regressive

Accepted Answer

progressiv

Question 8

Which of the following taxes reflects the ability-to-pay principle?
A.the federal income tax
B.the payroll tax
C.a sales tax on food
D.Social Security tax

Accepted Answer

the federa

Question 9

Figure: The Market for Yachts
(Figure: The Market for Yachts) Look at the figure The Market for Yachts.A quota of ________
will bring about the same price and output in the market for yachts as would an excise tax of
$30,000.
A.2,000
B.3,000
C.4,000
D.The answer is impossible to determine.

Accepted Answer

The answer of Figure: The Market for Yachts
(Figure: The Market...

Question 10

Taxation according to the ability-to-pay principle is best illustrated in the United States by:
A.sales taxes.
B.personal income taxes.
C.excise taxes.
D.gasoline taxes.

Accepted Answer

personal i

Question 11

(Table: Three Tax Structure Proposals) Look at the table Three Tax Structure Proposals.What percentage of income does an individual pay in taxes under proposal 3 if that individual's
pre-tax income is $100,000?
A.2%
B.10%
C.20%
D.25%

Accepted Answer

The answer of (Table: Three Tax Structure Proposals) Look at...

Question 12

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 the loss of consumer surplus due to the tax?
A.C
B.b + c
C.b
D.a + b + c

Accepted Answer

The answer of Figure: The Market for Blue Jeans
(Figure: The...

Question 13

Cigarette taxes have had the effect of eliminating the wedge between the demand price for cigarettes and the supply price of cigarettes.

Accepted Answer

A) True 
 B)False

Question 14

Paying a fee every time you use the municipal golf course is an example of the:
A.benefits principle.
B.ability-to-pay principle.
C.progressive tax principle.
D.regressive tax principle.

Accepted Answer

The answer of Paying a fee every time you use...

Question 15

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.

Accepted Answer

A) True 
 B)False

Question 16

If the marginal tax rate and the average tax rate are equal for all levels of income, then the tax structure is proportional.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following best describes a regressive tax?
A.A tax that takes a higher percentage of income as income rises.
B.A tax whose rate rises less than in proportion to income.
C.A tax that takes a fixed percentage of income regardless of the taxpayer's level of income.
D.A tax that takes a larger share of the income of high-income taxpayers than of low-income taxpayers.

Accepted Answer

A tax whose rate ris

Question 18

In general, the incidence of an excise tax is shared between buyers and sellers.

Accepted Answer

A) True 
 B)False

Question 19

If the marginal tax rate is less than the average tax rate, we know that the tax system is:
A.proportional.
B.progressive.
C.degressive.
D.regressive.

Accepted Answer

The answer of If the marginal tax rate is less...

Question 20

Explain how an excise tax levied on suppliers affects the supply curve.

Accepted Answer

Answer
The supply cu

How does an excise tax create a cost to society?

When the imposition of an excise tax causes the quantity demanded and quantity supplied to decrease, this will result in: A.deadweight loss. B.increases in producer surplus. C.increases in consumer surplus. D.increases in both consumer and producer surplus.

Paying a tax of $10 on an income of $100, a tax of $25 on an income of $200, and a tax of $60 on an income of $300 is an example of a: A.progressive tax. B.proportional tax. C.regressive tax. D.flat tax.

An excise tax that the government collects from the producers of a good: A.shifts the supply curve upward. B.causes a loss of revenue for the government. C.has a similar effect as a tax subsidy. D.shifts the supply curve downward.

U.S.federal taxes are generally , while state and local taxes are generally ________. A.progressive; progressive B.progressive; regressive C.regressive; progressive D.regressive; regressive

Which of the following taxes reflects the ability-to-pay principle? A.the federal income tax B.the payroll tax C.a sales tax on food D.Social Security tax

Figure: The Market for Yachts (Figure: The Market for Yachts) Look at the figure The Market for Yachts.A quota of ________ will bring about the same price and output in the market for yachts as would an excise tax of $30,000. A.2,000 B.3,000 C.4,000 D.The answer is impossible to determine.

Taxation according to the ability-to-pay principle is best illustrated in the United States by: A.sales taxes. B.personal income taxes. C.excise taxes. D.gasoline taxes.

(Table: Three Tax Structure Proposals) Look at the table Three Tax Structure Proposals.What percentage of income does an individual pay in taxes under proposal 3 if that individual's pre-tax income is $100,000? A.2% B.10% C.20% D.25%

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 the loss of consumer surplus due to the tax? A.C B.b + c C.b D.a + b + c

Cigarette taxes have had the effect of eliminating the wedge between the demand price for cigarettes and the supply price of cigarettes.

Paying a fee every time you use the municipal golf course is an example of the: A.benefits principle. B.ability-to-pay principle. C.progressive tax principle. D.regressive tax principle.

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.

If the marginal tax rate and the average tax rate are equal for all levels of income, then the tax structure is proportional.

In general, the incidence of an excise tax is shared between buyers and sellers.

If the marginal tax rate is less than the average tax rate, we know that the tax system is: A.proportional. B.progressive. C.degressive. D.regressive.

Explain how an excise tax levied on suppliers affects the supply curve.

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 7: Taxes

How does an excise tax create a cost to society?

When the imposition of an excise tax causes the quantity demanded and quantity supplied to decrease, this will result in: A.deadweight loss. B.increases in producer surplus. C.increases in consumer surplus. D.increases in both consumer and producer surplus.

Paying a tax of $10 on an income of $100, a tax of $25 on an income of $200, and a tax of $60 on an income of $300 is an example of a: A.progressive tax. B.proportional tax. C.regressive tax. D.flat tax.

An excise tax that the government collects from the producers of a good: A.shifts the supply curve upward. B.causes a loss of revenue for the government. C.has a similar effect as a tax subsidy. D.shifts the supply curve downward.

U.S.federal taxes are generally , while state and local taxes are generally ________. A.progressive; progressive B.progressive; regressive C.regressive; progressive D.regressive; regressive

Which of the following taxes reflects the ability-to-pay principle? A.the federal income tax B.the payroll tax C.a sales tax on food D.Social Security tax

Figure: The Market for Yachts (Figure: The Market for Yachts) Look at the figure The Market for Yachts.A quota of ________ will bring about the same price and output in the market for yachts as would an excise tax of $30,000. A.2,000 B.3,000 C.4,000 D.The answer is impossible to determine.

Taxation according to the ability-to-pay principle is best illustrated in the United States by: A.sales taxes. B.personal income taxes. C.excise taxes. D.gasoline taxes.

(Table: Three Tax Structure Proposals) Look at the table Three Tax Structure Proposals.What percentage of income does an individual pay in taxes under proposal 3 if that individual's pre-tax income is $100,000? A.2% B.10% C.20% D.25%

Cigarette taxes have had the effect of eliminating the wedge between the demand price for cigarettes and the supply price of cigarettes.

Paying a fee every time you use the municipal golf course is an example of the: A.benefits principle. B.ability-to-pay principle. C.progressive tax principle. D.regressive tax principle.

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.

If the marginal tax rate and the average tax rate are equal for all levels of income, then the tax structure is proportional.

In general, the incidence of an excise tax is shared between buyers and sellers.

If the marginal tax rate is less than the average tax rate, we know that the tax system is: A.proportional. B.progressive. C.degressive. D.regressive.

Explain how an excise tax levied on suppliers affects the supply curve.

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters