Question 1

Which of the following statements concerning the federal corporate income tax is true?

Accepted Answer

A) It is an efficient tax because it imposes a small excess burden relative to the tax revenue it raises. 
B) The incidence of the corporate income tax can be determined by using demand and supply analysis. 
C) Determining the incidence of the corporate income tax is complicated because it is not certain how corporations respond to the tax. 
D) The corporate income tax is an example of the benefits-received principle. 
A) It is an efficient tax because it imposes a small excess burden relative to the tax revenue it raises. 
B) The incidence of the corporate income tax can be determined by using demand and supply analysis. 
C) Determining the incidence of the corporate income tax is complicated because it is not certain how corporations respond to the tax. 
D) The corporate income tax is an example of the benefits-received principle.

Question 2

Figure 18-5
   
Figure 18-5 shows the Lorenz curve for a hypothetical country.
-Refer to Figure 18-5.The highest 20 percent of households

Accepted Answer

A) earn 24 percent of the society's total income. 
B) earn 28 percent of the society's total income. 
C) earn 42 percent of the society's total income. 
D) earn 72 percent of the society's total income. 
A) earn 24 percent of the society's total income. 
B) earn 28 percent of the society's total income. 
C) earn 42 percent of the society's total income. 
D) earn 72 percent of the society's total income.

Question 3

Is a typical person likely to gather more information when buying a new computer or when voting for a member of the U.S.Senate? Why?

Accepted Answer

The typical person is likely to gather m

Question 4

Figure 18-2
   
Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold, the producer's burden of the tax

Accepted Answer

A) is Pₐ - Pd under either supply curve. 
B) is Pb - Pₑ under either supply curve. 
C) is Pₐ - Pd if the supply curve is S₀ and Pb - Pₑ if the supply curve is S₁. 
D) is Pc - Pd if the supply curve is S₀ and Pc - Pₑ if the supply curve is S₁. 
A) is Pₐ - Pd under either supply curve. 
B) is Pb - Pₑ under either supply curve. 
C) is Pₐ - Pd if the supply curve is S₀ and Pb - Pₑ if the supply curve is S₁. 
D) is Pc - Pd if the supply curve is S₀ and Pc - Pₑ if the supply curve is S₁.

Question 5

The poverty rate is defined as the percentage of the

Accepted Answer

A) labor force that is poor according to the federal government's definition of poverty. 
B) population that is exempt from paying federal income taxes. 
C) population who qualify to receive welfare payments and food stamps. 
D) population that is poor according to the federal government's definition of poverty. 
A) labor force that is poor according to the federal government's definition of poverty. 
B) population that is exempt from paying federal income taxes. 
C) population who qualify to receive welfare payments and food stamps. 
D) population that is poor according to the federal government's definition of poverty.

Question 6

In reference to the federal income tax system, a tax bracket is

Accepted Answer

A) the estimated amount of federal income tax firms withhold from their employees' paychecks. 
B) the formula the federal government uses to determine the dollar amount of the personal exemption and the amounts taxpayers are allowed for deductions from their incomes. 
C) used to determine the average tax rate. 
D) the income range within which a tax rate applies. 
A) the estimated amount of federal income tax firms withhold from their employees' paychecks. 
B) the formula the federal government uses to determine the dollar amount of the personal exemption and the amounts taxpayers are allowed for deductions from their incomes. 
C) used to determine the average tax rate. 
D) the income range within which a tax rate applies.

Question 7

A personal exemption refers to

Accepted Answer

A) the tax rate that applies to a particular tax bracket. 
B) the tax bracket that represents basic living expenses. 
C) an amount representing basic living expenses that can be subtracted from income. 
D) a dispensation that allows certain qualifying individuals not to pay federal taxes. 
A) the tax rate that applies to a particular tax bracket. 
B) the tax bracket that represents basic living expenses. 
C) an amount representing basic living expenses that can be subtracted from income. 
D) a dispensation that allows certain qualifying individuals not to pay federal taxes.

Question 8

What is meant by "tax incidence"?

Accepted Answer

Tax incidence refers to the ac

Question 9

How would the elimination of a sales tax affect the market for a product that had been subject to the tax?

Accepted Answer

A) The demand for the product would rise and the equilibrium price would fall by the amount of the tax. 
B) The equilibrium price for the product would fall by less than the amount of the tax. 
C) The reduction in government revenue from the tax would be made up by an increase in property taxes. 
D) The supply of the product would become more elastic. 
A) The demand for the product would rise and the equilibrium price would fall by the amount of the tax. 
B) The equilibrium price for the product would fall by less than the amount of the tax. 
C) The reduction in government revenue from the tax would be made up by an increase in property taxes. 
D) The supply of the product would become more elastic.

Question 10

Of the following sources of tax revenue for state and local governments, which was the smallest in 2014?

Accepted Answer

A) sales taxes. 
B) the corporate income tax. 
C) the property tax. 
D) the individual income tax. 
A) sales taxes. 
B) the corporate income tax. 
C) the property tax. 
D) the individual income tax.

Question 11

Table 18-9
   
Table 18-9 shows the income tax brackets and tax rates for single taxpayers in Monrovia.
-Refer to Table 18-9.Sylvia is a single taxpayer with an income of $70,000.What is her marginal tax rate and what is her average tax rate?

Accepted Answer

A) marginal tax rate = 30%; average tax rate = 30% 
B) marginal tax rate = 8%; average tax rate = 19.3% 
C) marginal tax rate = 30%; average tax rate = 22.5% 
D) marginal tax rate = 20%; average tax rate = 30% 
A) marginal tax rate = 30%; average tax rate = 30% 
B) marginal tax rate = 8%; average tax rate = 19.3% 
C) marginal tax rate = 30%; average tax rate = 22.5% 
D) marginal tax rate = 20%; average tax rate = 30%

Question 12

What is rent seeking and how is it related to regulatory capture?

Accepted Answer

Rent seeking is the attempt by individua

Question 13

The term tax incidence refers to

Accepted Answer

A) the degree of progression of a tax. 
B) the actual division of the burden of a tax between buyers and sellers in a market. 
C) the amount of revenue government collects from a tax imposed on a good or service. 
D) whether the burden of a tax rests more heavily on those with higher incomes or those with lower incomes. 
A) the degree of progression of a tax. 
B) the actual division of the burden of a tax between buyers and sellers in a market. 
C) the amount of revenue government collects from a tax imposed on a good or service. 
D) whether the burden of a tax rests more heavily on those with higher incomes or those with lower incomes.

Question 14

Which of the following is a consequence of the voting paradox?

Accepted Answer

A) A majority of voters elect a candidate that does not represent the preferences of the voter who is in the political middle. 
B) Politicians support small groups of individuals and firms that benefit from special interest legislation, rather than a much larger group of voters who pay the cost for this legislation. 
C) Individuals and firms who benefit from government actions engage in rent seeking. 
D) The collective preferences of voters are not transitive and voting outcomes are inconsistent. 
A) A majority of voters elect a candidate that does not represent the preferences of the voter who is in the political middle. 
B) Politicians support small groups of individuals and firms that benefit from special interest legislation, rather than a much larger group of voters who pay the cost for this legislation. 
C) Individuals and firms who benefit from government actions engage in rent seeking. 
D) The collective preferences of voters are not transitive and voting outcomes are inconsistent.

Question 15

Figure 18-8
  
-Refer to Figure 18-8 to answer the following questions.
a.Did the distribution of income become more equal in 2016 than it was in 2015, or did it become less equal? Explain.
b.If area A = 1,900, area B = 450, and area C = 2,650, calculate the Gini coefficient for 2015 and the Gini coefficient for 2016.

Accepted Answer

a.The distribution of income became less

Question 16

Define logrolling.Explain why logrolling often results in legislation that benefits the economic interests of a few, while harming the interests of a larger group of people.

Accepted Answer

Logrolling refers to the situation where

Question 17

Which of the following statements best represents the opinion of many economists regarding the impact that changes in tax laws have had on recent changes in income inequality in the United States?

Accepted Answer

A) Reductions in income tax rates have favored high-income individuals more than low-income individuals. As a result, reductions in federal income tax rates have led to more income inequality. 
B) Reductions in income tax rates have created greater incentives for low-income individuals to work, save, and invest. As a result, reductions in federal income tax rates have led to less income inequality. 
C) Reductions in income tax rates probably have had little impact on the distribution of income. 
D) Reductions in income tax rates have been offset by increases in corporate income tax rates and payroll taxes. As a result, greater income inequality in the 1990s has been followed by a more equal distribution of income since 2001. 
A) Reductions in income tax rates have favored high-income individuals more than low-income individuals. As a result, reductions in federal income tax rates have led to more income inequality. 
B) Reductions in income tax rates have created greater incentives for low-income individuals to work, save, and invest. As a result, reductions in federal income tax rates have led to less income inequality. 
C) Reductions in income tax rates probably have had little impact on the distribution of income. 
D) Reductions in income tax rates have been offset by increases in corporate income tax rates and payroll taxes. As a result, greater income inequality in the 1990s has been followed by a more equal distribution of income since 2001.

Question 18

If the government wants to minimize the welfare loss of a tax, it should tax goods with more inelastic demands or supplies.

Accepted Answer

A) True 
 B)False

Question 19

U.S.taxpayers spend many hours during the year maintaining records for tax purposes and preparing their income tax returns.This administrative cost

Accepted Answer

A) is part of the deadweight loss of taxation. 
B) is equal to the value of consumer surplus associated with the income tax system. 
C) can be claimed as a deduction on income tax returns. 
D) is larger for individuals in the lowest income quintile than for individuals in the highest income quintile. 
A) is part of the deadweight loss of taxation. 
B) is equal to the value of consumer surplus associated with the income tax system. 
C) can be claimed as a deduction on income tax returns. 
D) is larger for individuals in the lowest income quintile than for individuals in the highest income quintile.

Question 20

Some economists who use the public choice model to explain the ways government intervenes in the economy believe that regulatory capture results when an agency or commission is given authority over a particular industry or product.Which of the following is the best example of regulatory capture?

Accepted Answer

A) The Food and Drug Administration (FD
A) has increased the time and expense pharmaceutical firms incur to receive approval to market a new drug. 
B) A federal government agency hires more employees than it requires to regulate an industry because it does not seek to minimize costs or maximize the agency's profits. 
C) The head of an agency is required to testify before Congress because Congress controls the size of the agency's budget. Congress "captures" the agency because of its budget authority. 
D) Firms that were regulated by the Interstate Commerce Commission (IC
C) attempted for many years to influence the ICC's actions. 
A) The Food and Drug Administration (FD
A) has increased the time and expense pharmaceutical firms incur to receive approval to market a new drug. 
B) A federal government agency hires more employees than it requires to regulate an industry because it does not seek to minimize costs or maximize the agency's profits. 
C) The head of an agency is required to testify before Congress because Congress controls the size of the agency's budget. Congress "captures" the agency because of its budget authority. 
D) Firms that were regulated by the Interstate Commerce Commission (IC
C) attempted for many years to influence the ICC's actions.

Which of the following statements concerning the federal corporate income tax is true?

Figure 18-5 Figure 18-5 shows the Lorenz curve for a hypothetical country. -Refer to Figure 18-5.The highest 20 percent of households

Is a typical person likely to gather more information when buying a new computer or when voting for a member of the U.S.Senate? Why?

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold, the producer's burden of the tax

The poverty rate is defined as the percentage of the

In reference to the federal income tax system, a tax bracket is

A personal exemption refers to

What is meant by "tax incidence"?

How would the elimination of a sales tax affect the market for a product that had been subject to the tax?

Of the following sources of tax revenue for state and local governments, which was the smallest in 2014?

Table 18-9 Table 18-9 shows the income tax brackets and tax rates for single taxpayers in Monrovia. -Refer to Table 18-9.Sylvia is a single taxpayer with an income of $70,000.What is her marginal tax rate and what is her average tax rate?

What is rent seeking and how is it related to regulatory capture?

The term tax incidence refers to

Which of the following is a consequence of the voting paradox?

Define logrolling.Explain why logrolling often results in legislation that benefits the economic interests of a few, while harming the interests of a larger group of people.

Which of the following statements best represents the opinion of many economists regarding the impact that changes in tax laws have had on recent changes in income inequality in the United States?

If the government wants to minimize the welfare loss of a tax, it should tax goods with more inelastic demands or supplies.

U.S.taxpayers spend many hours during the year maintaining records for tax purposes and preparing their income tax returns.This administrative cost

Some economists who use the public choice model to explain the ways government intervenes in the economy believe that regulatory capture results when an agency or commission is given authority over a particular industry or product.Which of the following is the best example of regulatory capture?

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

Which of the following statements concerning the federal corporate income tax is true?

Figure 18-5 Figure 18-5 shows the Lorenz curve for a hypothetical country. -Refer to Figure 18-5.The highest 20 percent of households

Is a typical person likely to gather more information when buying a new computer or when voting for a member of the U.S.Senate? Why?

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold, the producer's burden of the tax

The poverty rate is defined as the percentage of the

In reference to the federal income tax system, a tax bracket is

A personal exemption refers to

What is meant by "tax incidence"?

How would the elimination of a sales tax affect the market for a product that had been subject to the tax?

Of the following sources of tax revenue for state and local governments, which was the smallest in 2014?

Table 18-9 Table 18-9 shows the income tax brackets and tax rates for single taxpayers in Monrovia. -Refer to Table 18-9.Sylvia is a single taxpayer with an income of $70,000.What is her marginal tax rate and what is her average tax rate?

What is rent seeking and how is it related to regulatory capture?

The term tax incidence refers to

Which of the following is a consequence of the voting paradox?

Define logrolling.Explain why logrolling often results in legislation that benefits the economic interests of a few, while harming the interests of a larger group of people.

Which of the following statements best represents the opinion of many economists regarding the impact that changes in tax laws have had on recent changes in income inequality in the United States?

If the government wants to minimize the welfare loss of a tax, it should tax goods with more inelastic demands or supplies.

U.S.taxpayers spend many hours during the year maintaining records for tax purposes and preparing their income tax returns.This administrative cost

Some economists who use the public choice model to explain the ways government intervenes in the economy believe that regulatory capture results when an agency or commission is given authority over a particular industry or product.Which of the following is the best example of regulatory capture?

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