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

Figure 18-7 Figure 18-7 shows the Lorenz curve for a hypothetical country. -Refer to Figure 18-7. The second highest 20 percent of households

A marginal tax rate is calculated as

Figure 18-8 -Refer to Figure 18-8 to answer the following questions. a. Did the distribution of income become more equal in 2012 than it was in 2011, 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 2011 and the Gini coefficient for 2012.

A tax is efficient if

Article Summary In 2012, Colorado and Washington legalized marijuana for recreational use, and one of the major selling points in each state's pro-marijuana campaign was the possibility of generating millions of dollars in tax revenue from sales which could be used for funding general education. The Colorado legislature was weighing a proposal to tax marijuana at 30 percent, of which 15 percent would be a sales tax on consumers and 15 percent an excise tax on growers. Washington has set a tax rate of 44 percent on consumers and 25 percent each for growers and retailers. Since the legalization of marijuana is relatively new, projecting the economic impact of its sale is difficult, leading to many questions as to the quantities that will be produced and sold and what actual tax revenues will be generated. Source: Elizabeth Dwoskin, "Colorado and Washington Try to Figure Out How to Tax Marijuana," Bloomberg Businessweek, April 26, 2013. -Refer to the Article Summary. Colorado is weighing a proposal to tax marijuana at 30 percent, of which 15 percent would be a sales tax on consumers and 15 percent would be an excise tax on growers. Does this necessarily mean that each group will bear half the burden of the tax?

The sales tax

Most economists agree that some of the burden of the corporate income tax

Which of the following is not an example of rent-seeking behavior?

If, as your taxable income decreases, you pay a larger percentage of your taxable income in taxes, then the tax is

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

Table 18-9 Table 18-9 shows the income tax brackets and tax rates for single taxpayers in Monrovia. -Refer to Table 18-9. Calculate the income tax paid by Sylvia, a single taxpayer with an income of $70,000.

Figure 18-7 Figure 18-7 shows the Lorenz curve for a hypothetical country. -Refer to Figure 18-7. The second lowest 20 percent of households

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

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,

Which of the following is the largest source of revenue for the U.S. federal government?

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?

When the demand for a product is more elastic than the supply,

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

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

One important difference between the political process and the market process is that