Question 1

Figure 18-1
  
-Refer to Figure 18-1.Area E+H 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 2

What is the United States government's formal definition of the poverty line?

Accepted Answer

A) It is a level of annual income equal to total income in society divided by the population, adjusted for a family of four. 
B) It is a level of annual income equal to the amount of money necessary to purchase the minimal quantity of food required for adequate nutrition. 
C) It is the annual income level below which a household is exempt from taxes. 
D) It is a level of annual income equal to three times the amount of money necessary to purchase the minimal quantity of food required for adequate nutrition. 
A) It is a level of annual income equal to total income in society divided by the population, adjusted for a family of four. 
B) It is a level of annual income equal to the amount of money necessary to purchase the minimal quantity of food required for adequate nutrition. 
C) It is the annual income level below which a household is exempt from taxes. 
D) It is a level of annual income equal to three times the amount of money necessary to purchase the minimal quantity of food required for adequate nutrition.

Question 3

Financial contributions to the campaigns of members of Congress, state legislators, and other elected officials by firms that seek special interest legislation that make the firms better off are

Accepted Answer

A) examples of rent seeking. 
B) illegal. 
C) the result of the voting paradox. 
D) irrational because elected officials will almost always act in the interest of the voters who have to pay the cost of the legislation. 
A) examples of rent seeking. 
B) illegal. 
C) the result of the voting paradox. 
D) irrational because elected officials will almost always act in the interest of the voters who have to pay the cost of the legislation.

Question 4

Table 18-5
   
Table 18-5 shows the amount of taxes paid on various levels of income.
-Refer to Table 18-5.The tax system is

Accepted Answer

A) progressive throughout all levels of income. 
B) proportional throughout all levels of income. 
C) regressive throughout all levels of income. 
D) regressive between $20,000 and $25,000 of income and progressive between $32,000 and $42,000. 
A) progressive throughout all levels of income. 
B) proportional throughout all levels of income. 
C) regressive throughout all levels of income. 
D) regressive between $20,000 and $25,000 of income and progressive between $32,000 and $42,000.

Question 5

Studies by the U.S.Census Bureau have shown that

Accepted Answer

A) families remain below the poverty line for an average of five years. 
B) there is significant income mobility in the U.S. over time. 
C) income mobility in the U.S. is minimal. 
D) over half the people below the poverty line never move out of poverty. 
A) families remain below the poverty line for an average of five years. 
B) there is significant income mobility in the U.S. over time. 
C) income mobility in the U.S. is minimal. 
D) over half the people below the poverty line never move out of poverty.

Question 6

Which of the following is an example of a federal mandate?

Accepted Answer

A) an excise tax 
B) the Medicaid program 
C) the personal tax exemption 
D) the Food and Drug Administration (FD
A)  
A) an excise tax 
B) the Medicaid program 
C) the personal tax exemption 
D) the Food and Drug Administration (FD
A)

Question 7

The median voter theorem will be an accurate predicator of the outcomes of elections

Accepted Answer

A) only when voter turnout is very high. 
B) when a majority of voters have preferences very similar to those of the median voter. 
C) when a majority of voters have preferences different from those of the median voter. 
D) regardless of whether preferences among voters are similar or different from those of the median voter. 
A) only when voter turnout is very high. 
B) when a majority of voters have preferences very similar to those of the median voter. 
C) when a majority of voters have preferences different from those of the median voter. 
D) regardless of whether preferences among voters are similar or different from those of the median voter.

Question 8

For a given supply curve, how does the elasticity of demand affect the burden of a tax imposed on a product?

Accepted Answer

A) The excess burden of the tax will be minimized when the demand is unit elastic. 
B) The excess burden of the tax will be greater when the elasticity of supply is greater than the elasticity of demand. 
C) The excess burden of the tax will be greater when the demand is less elastic than when it is more elastic. 
D) The excess burden of the tax will be greater when the demand is more elastic than when it is less elastic. 
A) The excess burden of the tax will be minimized when the demand is unit elastic. 
B) The excess burden of the tax will be greater when the elasticity of supply is greater than the elasticity of demand. 
C) The excess burden of the tax will be greater when the demand is less elastic than when it is more elastic. 
D) The excess burden of the tax will be greater when the demand is more elastic than when it is less elastic.

Question 9

Unlike the market process, in the political market it is possible for some individuals to receive very large benefits from the political process without any significant impact on their tax bills.

Accepted Answer

A) True 
 B)False

Question 10

Explain why it is more difficult to determine the incidence of the corporate income tax than it is to determine the incidence of the tax on gasoline.

Accepted Answer

You can determine the incidence of the g

Question 11

Describe each of the principles governments consider when deciding which taxes to use.

Accepted Answer

In deciding which taxes to use, a govern

Question 12

Former Alabama Governor George Wallace ran for president several times, once as a third-party candidate in 1968.Wallace claimed there was "not a dime's worth of difference" between the Democratic and Republican parties during one of his campaigns.How does Wallace's comment relate to the median voter theorem?

Accepted Answer

To win his party's nomination for presid

Question 13

Suppose the government wants to finance housing for low-income families by placing a tax on the purchase of luxury homes.Assume the government defines a luxury home as a home that is purchased for at least $1 million.This tax is consistent with the

Accepted Answer

A) benefits-received principle. 
B) social equity principle. 
C) ability-to-pay principle. 
D) horizontal-equity principle. 
A) benefits-received principle. 
B) social equity principle. 
C) ability-to-pay principle. 
D) horizontal-equity principle.

Question 14

For the top 1 percent of income distribution, the share of total income earned by households in this group was about ________ percent in 2015.

Accepted Answer

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

Question 15

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 consumer's burden of the tax

Accepted Answer

A) is greater under the more elastic supply curve S₀. 
B) is greater under the less elastic supply curve S₀. 
C) is greater under the less elastic supply curve S₁. 
D) is the same under either supply curve because there is a single demand curve that captures buyers' market behavior. 
A) is greater under the more elastic supply curve S₀. 
B) is greater under the less elastic supply curve S₀. 
C) is greater under the less elastic supply curve S₁. 
D) is the same under either supply curve because there is a single demand curve that captures buyers' market behavior.

Question 16

Which of the following is the source of revenue for Medicare and Social Security in the United States?

Accepted Answer

A) individual income taxes 
B) sales taxes 
C) social insurance taxes 
D) property taxes 
A) individual income taxes 
B) sales taxes 
C) social insurance taxes 
D) property taxes

Question 17

Figure 18-6
   
Figure 18-6 shows the Lorenz curves for Islandia and Syldavia.
-Refer to Figure 18-6.If area X = 2,060, area Y = 240, and area Z = 2,700, calculate the Gini coefficient for Islandia.

Accepted Answer

A) 0.41 
B) 0.45 
C) 0.70 
D) 0.76 
A) 0.41 
B) 0.45 
C) 0.70 
D) 0.76

Question 18

Exemptions and deductions are used

Accepted Answer

A) to add to taxes that must be paid. 
B) by taxpayers to reduce the amount of income subject to tax. 
C) to determine the type of tax structure. 
D) to determine what items are subject to sales taxes. 
A) to add to taxes that must be paid. 
B) by taxpayers to reduce the amount of income subject to tax. 
C) to determine the type of tax structure. 
D) to determine what items are subject to sales taxes.

Question 19

The actual division of the burden of a tax is called

Accepted Answer

A) tax credit. 
B) tax incidence. 
C) excess burden. 
D) tax dispersion. 
A) tax credit. 
B) tax incidence. 
C) excess burden. 
D) tax dispersion.

Question 20

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.Colorado taxes marijuana with a 12.9% sales tax on buyers and a 15% wholesale excise tax on producers, which equates to 46 percent of the total taxes paid by retail buyers and 54 percent paid by producers.Does this necessarily mean that buyers will bear 46 percent of the burden of the tax and producers will bear 56 percent of the burden?

Accepted Answer

A) Yes, the percentage of taxes paid by each group represents the burden of the tax. 
B) No, because consumers and producers always bear equal burdens of a tax. 
C) No, the burden of a tax is always 100 percent on the consumer. 
D) No, the burden of the tax will depend on the elasticity of demand and supply. 
A) Yes, the percentage of taxes paid by each group represents the burden of the tax. 
B) No, because consumers and producers always bear equal burdens of a tax. 
C) No, the burden of a tax is always 100 percent on the consumer. 
D) No, the burden of the tax will depend on the elasticity of demand and supply.

Figure 18-1 -Refer to Figure 18-1.Area E+H represents

What is the United States government's formal definition of the poverty line?

Financial contributions to the campaigns of members of Congress, state legislators, and other elected officials by firms that seek special interest legislation that make the firms better off are

Table 18-5 Table 18-5 shows the amount of taxes paid on various levels of income. -Refer to Table 18-5.The tax system is

Studies by the U.S.Census Bureau have shown that

Which of the following is an example of a federal mandate?

The median voter theorem will be an accurate predicator of the outcomes of elections

For a given supply curve, how does the elasticity of demand affect the burden of a tax imposed on a product?

Unlike the market process, in the political market it is possible for some individuals to receive very large benefits from the political process without any significant impact on their tax bills.

Explain why it is more difficult to determine the incidence of the corporate income tax than it is to determine the incidence of the tax on gasoline.

Describe each of the principles governments consider when deciding which taxes to use.

Suppose the government wants to finance housing for low-income families by placing a tax on the purchase of luxury homes.Assume the government defines a luxury home as a home that is purchased for at least $1 million.This tax is consistent with the

For the top 1 percent of income distribution, the share of total income earned by households in this group was about ________ percent in 2015.

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 consumer's burden of the tax

Which of the following is the source of revenue for Medicare and Social Security in the United States?

Figure 18-6 Figure 18-6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 18-6.If area X = 2,060, area Y = 240, and area Z = 2,700, calculate the Gini coefficient for Islandia.

Exemptions and deductions are used

The actual division of the burden of a tax is called

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

Figure 18-1 -Refer to Figure 18-1.Area E+H represents

What is the United States government's formal definition of the poverty line?

Financial contributions to the campaigns of members of Congress, state legislators, and other elected officials by firms that seek special interest legislation that make the firms better off are

Table 18-5 Table 18-5 shows the amount of taxes paid on various levels of income. -Refer to Table 18-5.The tax system is

Studies by the U.S.Census Bureau have shown that

Which of the following is an example of a federal mandate?

The median voter theorem will be an accurate predicator of the outcomes of elections

For a given supply curve, how does the elasticity of demand affect the burden of a tax imposed on a product?

Unlike the market process, in the political market it is possible for some individuals to receive very large benefits from the political process without any significant impact on their tax bills.

Explain why it is more difficult to determine the incidence of the corporate income tax than it is to determine the incidence of the tax on gasoline.

Describe each of the principles governments consider when deciding which taxes to use.

Suppose the government wants to finance housing for low-income families by placing a tax on the purchase of luxury homes.Assume the government defines a luxury home as a home that is purchased for at least $1 million.This tax is consistent with the

For the top 1 percent of income distribution, the share of total income earned by households in this group was about ________ percent in 2015.

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 consumer's burden of the tax

Which of the following is the source of revenue for Medicare and Social Security in the United States?

Figure 18-6 Figure 18-6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 18-6.If area X = 2,060, area Y = 240, and area Z = 2,700, calculate the Gini coefficient for Islandia.

Exemptions and deductions are used

The actual division of the burden of a tax is called

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