Question 1

A marginal tax rate is

Accepted Answer

A) the fraction of income that must be paid in taxes. 
B) the fraction of each additional dollar of income that must be paid in taxes. 
C) the incremental income one must earn to offset each additional dollar of tax. 
D) the ratio of a change in income to a change in taxes paid. 
A) the fraction of income that must be paid in taxes. 
B) the fraction of each additional dollar of income that must be paid in taxes. 
C) the incremental income one must earn to offset each additional dollar of tax. 
D) the ratio of a change in income to a change in taxes paid.

Question 2

The proposition that the outcome of a majority vote is likely to represent the preferences of the voter who is in the political middle is called

Accepted Answer

A) the mean (or average)voter theorem. 
B) the voting paradox. 
C) the Arrow impossibility theorem. 
D) the median voter theorem. 
A) the mean (or average)voter theorem. 
B) the voting paradox. 
C) the Arrow impossibility theorem. 
D) the median voter theorem.

Question 3

Article Summary
Monthly marijuana sales in Colorado topped $100 million for the first time in August, 2015, with $59.2 million in recreational sales and $41.4 million in medical sales. Colorado has levied three types of state taxes on recreational-use marijuana: a 2.9% standard sales tax, a 10% special marijuana sales tax, and a 15% excise tax on wholesale marijuana transfers. The 15% excise tax is earmarked for school construction projects. In August, recreational-use taxes and fees totaled $11.2 million and medical taxes and fees were $2 million, bringing total revenue-to-date for the year to over $86 million.
Source: Elizabeth Hernandez, "Colorado monthly marijuana sales eclipse $100 million mark," Denver Post, October 9, 2015.
-Refer to the Article Summary above.Suppose the sale of marijuana is legalized in Florida, and the state decides to charge a tax of $50 per ounce on each sale, with the state claiming that retailers will bear the entire burden of this tax.Draw a graph illustrating the situation where retail outlets would bear the entire tax burden of $50 per ounce of marijuana.Explain what would need to be true about the demand for marijuana for retailers to bear the entire burden of this tax, and if this would likely occur if marijuana sales were legalized.

Accepted Answer

For retailers to bear the entire burden

Question 4

What is the poverty rate?

Accepted Answer

A) the rate at which the number of people relative to the size of the population fall below the poverty line 
B) the percentage of the population earning an annual income below the poverty line, according to the federal government's definition 
C) the percentage of working adults whose annual income is sufficiently low as to be are exempt from paying income taxes 
D) the percentage of households who qualify for government assistance to meet the minimal requirement for adequate nutrition 
A) the rate at which the number of people relative to the size of the population fall below the poverty line 
B) the percentage of the population earning an annual income below the poverty line, according to the federal government's definition 
C) the percentage of working adults whose annual income is sufficiently low as to be are exempt from paying income taxes 
D) the percentage of households who qualify for government assistance to meet the minimal requirement for adequate nutrition

Question 5

"For a given supply curve, the excess burden of a tax will be greater when the demand for a product is less elastic than when the demand is more elastic." This statement is

Accepted Answer

A) correct. 
B) incorrect because the incidence of the tax, not the burden of the tax, is affected by the elasticity of demand. 
C) incorrect. When demand is less elastic, the burden of the tax is smaller than when the demand is more elastic. 
D) incorrect. The statement confuses demand with quantity demanded. 
A) correct. 
B) incorrect because the incidence of the tax, not the burden of the tax, is affected by the elasticity of demand. 
C) incorrect. When demand is less elastic, the burden of the tax is smaller than when the demand is more elastic. 
D) incorrect. The statement confuses demand with quantity demanded.

Question 6

Figure 18-1
  
-Refer to Figure 18-1.Area F+G represents

Accepted Answer

A) the portion of sales tax revenue borne by consumers. 
B) the portion of sales tax revenue borne by producers. 
C) the excess burden of the sales tax. 
D) sales tax revenue collected by the government. 
A) the portion of sales tax revenue borne by consumers. 
B) the portion of sales tax revenue borne by producers. 
C) the excess burden of the sales tax. 
D) sales tax revenue collected by the government.

Question 7

Horizontal equity means that two people in identical economic situations should pay the same amount of taxes.

Accepted Answer

A) True 
 B)False

Question 8

The public choice model

Accepted Answer

A) examines the degree of market power that the public exerts in a market economy. 
B) examines the public's role in appointing politicians and ensuring that elected officials act in ways to reflect the public's preferences. 
C) applies economic analysis to government decision making. 
D) applies economic analysis to the collective decision making of consumers. 
A) examines the degree of market power that the public exerts in a market economy. 
B) examines the public's role in appointing politicians and ensuring that elected officials act in ways to reflect the public's preferences. 
C) applies economic analysis to government decision making. 
D) applies economic analysis to the collective decision making of consumers.

Question 9

Table 18-3
  
-Refer to Table 18-3.The table above outlines the rankings of three members of the U.S.Senate on three spending alternatives.Assume that Congress can spend additional revenue on only one of the three spending alternatives and that Bart, Lisa, and Maggie, all members of the Senate, participate in a series of votes in which they are to determine which of the spending alternatives should receive funding.Three votes will be taken: (1)Immigration Reform and Unemployment Benefits (2)Immigration Reform and Social Security Reform and (3)Unemployment Benefits and Social Security Reform.
Show the results of each vote and determine whether the voting paradox will occur as a result of these votes.

Accepted Answer

First vote:
 @#IMG-DLM& 
First vote: the majority

Question 10

Which of the following statements is true?

Accepted Answer

A) If transfer payments such as Social Security payments to the retired and disabled were excluded from official statistics used to estimate the percentage of people with incomes below the poverty line, the amount of poverty in the United States would be much greater. 
B) Because the federal income tax system is progressive, measuring poverty using after-tax incomes results in a higher poverty rate than if poverty is measured using before-tax incomes . 
C) If non-cash benefits such as food stamps and rent subsidies were added to the incomes of low-income families, poverty would be eliminated. 
D) In the United States, income remaining after federal taxes are paid is more equally distributed than income before taxes. 
A) If transfer payments such as Social Security payments to the retired and disabled were excluded from official statistics used to estimate the percentage of people with incomes below the poverty line, the amount of poverty in the United States would be much greater. 
B) Because the federal income tax system is progressive, measuring poverty using after-tax incomes results in a higher poverty rate than if poverty is measured using before-tax incomes . 
C) If non-cash benefits such as food stamps and rent subsidies were added to the incomes of low-income families, poverty would be eliminated. 
D) In the United States, income remaining after federal taxes are paid is more equally distributed than income before taxes.

Question 11

A marginal tax rate is calculated as

Accepted Answer

A) total taxable income ÷ by taxes paid. 
B) taxes paid ÷ total taxable income. 
C) change in taxes paid ÷ the change in total taxable income. 
D) change in taxable income ÷ change in taxes paid. 
A) total taxable income ÷ by taxes paid. 
B) taxes paid ÷ total taxable income. 
C) change in taxes paid ÷ the change in total taxable income. 
D) change in taxable income ÷ change in taxes paid.

Question 12

"Sin taxes," such as taxes on alcoholic beverages, are intended to

Accepted Answer

A) increase the amount of the products supplied. 
B) generate money to subsidize production of the products taxed. 
C) reduce the quantity demanded. 
D) generate funds to aid in the medical care of those harmed by the product. 
A) increase the amount of the products supplied. 
B) generate money to subsidize production of the products taxed. 
C) reduce the quantity demanded. 
D) generate funds to aid in the medical care of those harmed by the product.

Question 13

Economists argue that the corporate income tax is an example of a tax with a high deadweight loss because

Accepted Answer

A) some of the burden of the tax is passed on to consumers in the form of higher prices. 
B) it discourages corporations from undertaking capital investments to enhance market competitiveness. 
C) taxing a corporation's income amounts to double taxing the earnings on individual shareholders' investments in corporations. 
D) it encourages corporations to seek ways to evade taxes. 
A) some of the burden of the tax is passed on to consumers in the form of higher prices. 
B) it discourages corporations from undertaking capital investments to enhance market competitiveness. 
C) taxing a corporation's income amounts to double taxing the earnings on individual shareholders' investments in corporations. 
D) it encourages corporations to seek ways to evade taxes.

Question 14

What is the voting paradox?

Accepted Answer

A) the observation that less than 60 percent of those eligible to vote actually vote 
B) the observation that majority voting may not always result in consistent choices 
C) the idea that wealthy corporations are able to sway politicians to act in ways contrary to the desires of the majority 
D) people are aware that their votes will not change the political outcome since these outcomes are predetermined by a group of influential politicians 
A) the observation that less than 60 percent of those eligible to vote actually vote 
B) the observation that majority voting may not always result in consistent choices 
C) the idea that wealthy corporations are able to sway politicians to act in ways contrary to the desires of the majority 
D) people are aware that their votes will not change the political outcome since these outcomes are predetermined by a group of influential politicians

Question 15

A proportional tax is a tax for which people with lower incomes

Accepted Answer

A) pay a higher percentage of their incomes in tax than do people with higher incomes. 
B) pay a lower percentage of their incomes in tax than do people with higher incomes. 
C) pay the same percentage of their incomes in tax as do people with higher incomes. 
D) pay the same amount of taxes as people with higher incomes pay. 
A) pay a higher percentage of their incomes in tax than do people with higher incomes. 
B) pay a lower percentage of their incomes in tax than do people with higher incomes. 
C) pay the same percentage of their incomes in tax as do people with higher incomes. 
D) pay the same amount of taxes as people with higher incomes pay.

Question 16

Public schools in the United States get most of their operating funds from

Accepted Answer

A) government production and subsidies. 
B) income taxes on corporate profits. 
C) local property taxes. 
D) tariffs collected on imported goods. 
A) government production and subsidies. 
B) income taxes on corporate profits. 
C) local property taxes. 
D) tariffs collected on imported goods.

Question 17

Describe the main factors economists believe cause inequality of income.

Accepted Answer

The distribution of income is based main

Question 18

For the top 1 percent of income distribution, the share of federal individual income taxes paid by households in this group in 2015 was ________ percent.

Accepted Answer

A) 9 
B) 17 
C) 44 
D) 68 
A) 9 
B) 17 
C) 44 
D) 68

Question 19

Economists caution that conventional statistics used to estimate the extent of poverty in the United States fail to account for benefits people receive that, if considered, would reduce the amount of poverty.Which of the following is an example of these benefits?

Accepted Answer

A) Individuals can use tax credits and the personal exemption to reduce their taxable incomes. This reduces what they owe the government and increases their disposable incomes. 
B) The federal income tax system is progressive. As a result, the poor have higher after-tax incomes than they would have if the income tax system was proportional or regressive. 
C) Individuals with low incomes receive non-cash benefits such as free school lunches and food stamps. 
D) The federal minimum wage forces employers to pay workers with low skills an efficiency wage. 
A) Individuals can use tax credits and the personal exemption to reduce their taxable incomes. This reduces what they owe the government and increases their disposable incomes. 
B) The federal income tax system is progressive. As a result, the poor have higher after-tax incomes than they would have if the income tax system was proportional or regressive. 
C) Individuals with low incomes receive non-cash benefits such as free school lunches and food stamps. 
D) The federal minimum wage forces employers to pay workers with low skills an efficiency wage.

Question 20

A common belief among political analysts is that someone running for his or her party's nomination for president of the United States must choose a different strategy once the nomination is secured.To be nominated, the candidate must appeal to voters from one party - Democrat or Republican - but in a general election a party's nominee must appeal to voters from both parties as well as independent voters.Which of the following offers the best explanation for this change in strategy?

Accepted Answer

A) the Arrow impossibility theorem 
B) the voting paradox 
C) the median voter theorem 
D) rent seeking 
A) the Arrow impossibility theorem 
B) the voting paradox 
C) the median voter theorem 
D) rent seeking

A marginal tax rate is

The proposition that the outcome of a majority vote is likely to represent the preferences of the voter who is in the political middle is called

What is the poverty rate?

"For a given supply curve, the excess burden of a tax will be greater when the demand for a product is less elastic than when the demand is more elastic." This statement is

Figure 18-1 -Refer to Figure 18-1.Area F+G represents

Horizontal equity means that two people in identical economic situations should pay the same amount of taxes.

The public choice model

Which of the following statements is true?

A marginal tax rate is calculated as

"Sin taxes," such as taxes on alcoholic beverages, are intended to

Economists argue that the corporate income tax is an example of a tax with a high deadweight loss because

What is the voting paradox?

A proportional tax is a tax for which people with lower incomes

Public schools in the United States get most of their operating funds from

Describe the main factors economists believe cause inequality of income.

For the top 1 percent of income distribution, the share of federal individual income taxes paid by households in this group in 2015 was ________ percent.

Economists caution that conventional statistics used to estimate the extent of poverty in the United States fail to account for benefits people receive that, if considered, would reduce the amount of poverty.Which of the following is an example of these benefits?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Filters

Exam 18: Public Choice, Taxes, and the Distribution of Income

A marginal tax rate is

The proposition that the outcome of a majority vote is likely to represent the preferences of the voter who is in the political middle is called

What is the poverty rate?

"For a given supply curve, the excess burden of a tax will be greater when the demand for a product is less elastic than when the demand is more elastic." This statement is

Figure 18-1 -Refer to Figure 18-1.Area F+G represents

Horizontal equity means that two people in identical economic situations should pay the same amount of taxes.

The public choice model

Which of the following statements is true?

A marginal tax rate is calculated as

"Sin taxes," such as taxes on alcoholic beverages, are intended to

Economists argue that the corporate income tax is an example of a tax with a high deadweight loss because

What is the voting paradox?

A proportional tax is a tax for which people with lower incomes

Public schools in the United States get most of their operating funds from

Describe the main factors economists believe cause inequality of income.

For the top 1 percent of income distribution, the share of federal individual income taxes paid by households in this group in 2015 was ________ percent.

Economists caution that conventional statistics used to estimate the extent of poverty in the United States fail to account for benefits people receive that, if considered, would reduce the amount of poverty.Which of the following is an example of these benefits?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Filters