Question 1

Figure 18-1  
-Refer to Figure 18-1.Area B+C+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 2

A tax imposed by a state or local government on retail sales of most products is

Accepted Answer

A) an excise tax. 
B) a social service tax. 
C) a consumption tax. 
D) a sales tax. 
A) an excise tax. 
B) a social service tax. 
C) a consumption tax. 
D) a sales tax.

Question 3

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 4

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 5

If grocery stores were legally required to charge a 10-cent fee for disposable grocery bags,who would bear the largest burden of this fee?

Accepted Answer

Since consumers need groceries and would

Question 6

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 7

According to the benefits-received principle,those who receive the benefits from a government program should pay the taxes that support the program.

Accepted Answer

A) True 
 B)False

Question 8

From 1970 to 2006,the poverty rate in East Asia rose slightly but the level of poverty in sub-Saharan Africa fell dramatically.

Accepted Answer

A) True 
 B)False

Question 9

In 2010,which type of tax raised the most revenue for the U.S.federal government? Which type of tax raised the most revenue for state and local governments?

Accepted Answer

In 2010,social insurance taxes

Question 10

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 11

Table 18-3
   Table 18-3 contains data on household spending at different income levels.Suppose that a 3 percent tax is levied on all consumption spending.
-Refer to Table 18-3.The consumption tax is

Accepted Answer

A) proportional. 
B) progressive. 
C) income neutral. 
D) regressive. 
A) proportional. 
B) progressive. 
C) income neutral. 
D) regressive.

Question 12

Table 18-6
   Table 18-6 shows the income tax brackets and tax rates for single taxpayers in Monrovia.
-Refer to Table 18-6.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 13

One result of the public choice model is that most economists believe that

Accepted Answer

A) when market failure occurs,government intervention will always lead to a more efficient outcome. 
B) government intervention will always result in a reduction in economic efficiency in regulated markets. 
C) policymakers may have incentives to intervene in the economy in ways that do not promote economic efficiency. 
D) the voting paradox will prevent voters from selecting the best person for public office. 
A) when market failure occurs,government intervention will always lead to a more efficient outcome. 
B) government intervention will always result in a reduction in economic efficiency in regulated markets. 
C) policymakers may have incentives to intervene in the economy in ways that do not promote economic efficiency. 
D) the voting paradox will prevent voters from selecting the best person for public office.

Question 14

Which of the following is an example of rent seeking behavior?

Accepted Answer

A) Apple earned large profits from the development and sale of the iPhone. 
B) Amazon introduced the Kindle to compete with Sony's Digital Reader.Amazon was motivated by the desire to earn profits from the Kindle but also increased the choice of digital music players available to consumers. 
C) U.S.sugar firms convinced Congress to impose a quota on imports of sugar. 
D) Recent increases in cigarette taxes faced little opposition from voters,many of whom were rationally ignorant with respect to the tax. 
A) Apple earned large profits from the development and sale of the iPhone. 
B) Amazon introduced the Kindle to compete with Sony's Digital Reader.Amazon was motivated by the desire to earn profits from the Kindle but also increased the choice of digital music players available to consumers. 
C) U.S.sugar firms convinced Congress to impose a quota on imports of sugar. 
D) Recent increases in cigarette taxes faced little opposition from voters,many of whom were rationally ignorant with respect to the tax.

Question 15

Economists James Buchanan and Gordon Tullock are well-known for developing

Accepted Answer

A) the impossibility theorem. 
B) the voting paradox. 
C) the public choice model. 
D) the concept of government failure. 
A) the impossibility theorem. 
B) the voting paradox. 
C) the public choice model. 
D) the concept of government failure.

Question 16

Which of the following statements refers to rent seeking?

Accepted Answer

A) "Laws passed by the federal government often provide benefits for a small number of individuals.These individuals,in turn,have an incentive to contribute to the campaigns of politicians who pass these laws." 
B) "The federal government should spend more money on programs that help low income citizens and less money on national defense." 
C) "The role of the federal government in the U.S.economy grew significantly after the Great Depression.Government spending and taxes are a much greater proportion of total income today than they were in 1929." 
D) "There is an opportunity cost whenever the federal government spends tax revenue.For example,an additional $1 billion spent on national defense means there will be less revenue for highway construction and maintenance or some other program." 
A) "Laws passed by the federal government often provide benefits for a small number of individuals.These individuals,in turn,have an incentive to contribute to the campaigns of politicians who pass these laws." 
B) "The federal government should spend more money on programs that help low income citizens and less money on national defense." 
C) "The role of the federal government in the U.S.economy grew significantly after the Great Depression.Government spending and taxes are a much greater proportion of total income today than they were in 1929." 
D) "There is an opportunity cost whenever the federal government spends tax revenue.For example,an additional $1 billion spent on national defense means there will be less revenue for highway construction and maintenance or some other program."

Question 17

Logrolling refers to attempts by individuals to use government action to make themselves better off at the expense of others.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is used to argue that the self-interest of public policymakers will often lead to actions that are inconsistent with the preferences of the voters they represent?

Accepted Answer

A) the voting paradox 
B) the median voter theorem 
C) rent seeking 
D) transitivity of voters' preferences 
A) the voting paradox 
B) the median voter theorem 
C) rent seeking 
D) transitivity of voters' preferences

Question 19

Which of the following summarizes the information provided by a Lorenz curve?

Accepted Answer

A) the Lorenz coefficient 
B) the income distribution ratio 
C) the Gini coefficient 
D) the slope (the rise divided by the run)of the Lorenz curve at a particular point on the curve 
A) the Lorenz coefficient 
B) the income distribution ratio 
C) the Gini coefficient 
D) the slope (the rise divided by the run)of the Lorenz curve at a particular point on the curve

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

A tax imposed by a state or local government on retail sales of most products is

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

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.

If grocery stores were legally required to charge a 10-cent fee for disposable grocery bags,who would bear the largest burden of this fee?

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

According to the benefits-received principle,those who receive the benefits from a government program should pay the taxes that support the program.

From 1970 to 2006,the poverty rate in East Asia rose slightly but the level of poverty in sub-Saharan Africa fell dramatically.

In 2010,which type of tax raised the most revenue for the U.S.federal government? Which type of tax raised the most revenue for state and local governments?

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

Table 18-3 Table 18-3 contains data on household spending at different income levels.Suppose that a 3 percent tax is levied on all consumption spending. -Refer to Table 18-3.The consumption tax is

Table 18-6 Table 18-6 shows the income tax brackets and tax rates for single taxpayers in Monrovia. -Refer to Table 18-6.Sylvia is a single taxpayer with an income of $70,000.What is her marginal tax rate and what is her average tax rate?

One result of the public choice model is that most economists believe that

Which of the following is an example of rent seeking behavior?

Economists James Buchanan and Gordon Tullock are well-known for developing

Which of the following statements refers to rent seeking?

Logrolling refers to attempts by individuals to use government action to make themselves better off at the expense of others.

Which of the following is used to argue that the self-interest of public policymakers will often lead to actions that are inconsistent with the preferences of the voters they represent?

Which of the following summarizes the information provided by a Lorenz curve?

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 B+C+F+G represents

A tax imposed by a state or local government on retail sales of most products is

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

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.

If grocery stores were legally required to charge a 10-cent fee for disposable grocery bags,who would bear the largest burden of this fee?

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

According to the benefits-received principle,those who receive the benefits from a government program should pay the taxes that support the program.

From 1970 to 2006,the poverty rate in East Asia rose slightly but the level of poverty in sub-Saharan Africa fell dramatically.

In 2010,which type of tax raised the most revenue for the U.S.federal government? Which type of tax raised the most revenue for state and local governments?

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

Table 18-3 Table 18-3 contains data on household spending at different income levels.Suppose that a 3 percent tax is levied on all consumption spending. -Refer to Table 18-3.The consumption tax is

Table 18-6 Table 18-6 shows the income tax brackets and tax rates for single taxpayers in Monrovia. -Refer to Table 18-6.Sylvia is a single taxpayer with an income of $70,000.What is her marginal tax rate and what is her average tax rate?

One result of the public choice model is that most economists believe that

Which of the following is an example of rent seeking behavior?

Economists James Buchanan and Gordon Tullock are well-known for developing

Which of the following statements refers to rent seeking?

Logrolling refers to attempts by individuals to use government action to make themselves better off at the expense of others.

Which of the following is used to argue that the self-interest of public policymakers will often lead to actions that are inconsistent with the preferences of the voters they represent?

Which of the following summarizes the information provided by a Lorenz curve?

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