Question 1

What is a Lorenz curve and what is a Gini coefficient?

Accepted Answer

A Lorenz curve is a curve that shows the

Question 2

The average tax rate is calculated as

Accepted Answer

A)  total income divided by the total tax paid. 
B)  the change in total tax paid divided by the change in income. 
C)  total tax paid divided by total income. 
D)  the change in income divided by the change in total tax paid. 
A)  total income divided by the total tax paid. 
B)  the change in total tax paid divided by the change in income. 
C)  total tax paid divided by total income. 
D)  the change in income divided by the change in total tax paid.

Question 3

The public choice model asserts that the self-interest of policymakers is likely to cause them to take actions that are inconsistent with the preferences of voters,even where those preferences are clear.

Accepted Answer

A) True 
 B)False

Question 4

Congressman Gallstone seeks support from his colleagues for a bill he sponsors that will establish a new national park in his district.He offers to support Congresswoman Disrail's proposal to build a new library in her district in exchange for her vote for his national park bill.This is an example of

Accepted Answer

A)  regulatory capture. 
B)  logrolling. 
C)  rational ignorance. 
D)  government failure. 
A)  regulatory capture. 
B)  logrolling. 
C)  rational ignorance. 
D)  government failure.

Question 5

A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises.

Accepted Answer

A) True 
 B)False

Question 6

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 7

The government of Silverado raises revenue to operate the city's hospital,open to all residents,through a general income tax paid by its residents.This method of raising revenue is consistent with the benefits-received principle.

Accepted Answer

A) True 
 B)False

Question 8

The term "payroll taxes" is often used to refer to

Accepted Answer

A)  individual income taxes that are withheld from paychecks. 
B)  corporate income taxes. 
C)  Social Security and Medicare taxes. 
D)  sales taxes. 
A)  individual income taxes that are withheld from paychecks. 
B)  corporate income taxes. 
C)  Social Security and Medicare taxes. 
D)  sales taxes.

Question 9

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.

Accepted Answer

a.The distribution of income became less

Question 10

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

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 11

The actual division of a tax between buyers and sellers in a market is the excess burden of the tax.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements about the distribution of income in the United States is true?

Accepted Answer

A)  The United States has the most unequal distribution of income of any high-income country in the world. 
B)  The United States has a more unequal distribution of income than Bolivia and Botswana. 
C)  The distribution of income in the United States is fairly equal and there have been no dramatic changes over time. 
D)  The distribution of income in the United States is unequal and has become significantly more unequal over time. 
A)  The United States has the most unequal distribution of income of any high-income country in the world. 
B)  The United States has a more unequal distribution of income than Bolivia and Botswana. 
C)  The distribution of income in the United States is fairly equal and there have been no dramatic changes over time. 
D)  The distribution of income in the United States is unequal and has become significantly more unequal over time.

Question 13

The sales tax

Accepted Answer

A)  is consistent with the benefits-received principle because low-income individuals spend less on goods and services than do high-income people. 
B)  is not consistent with the ability-to-pay principle because low-income individuals tend to spend a larger fraction of their income than do high-income individuals. 
C)  is not consistent with the ability-to-pay principle because low-income individuals tend to purchase a smaller bundle of goods and services compared to high-income individuals. 
D)  is not consistent with the benefits-received principle because low-income individuals spend less on goods and services than do high-income individuals, yet pay the same sales tax rate. 
A)  is consistent with the benefits-received principle because low-income individuals spend less on goods and services than do high-income people. 
B)  is not consistent with the ability-to-pay principle because low-income individuals tend to spend a larger fraction of their income than do high-income individuals. 
C)  is not consistent with the ability-to-pay principle because low-income individuals tend to purchase a smaller bundle of goods and services compared to high-income individuals. 
D)  is not consistent with the benefits-received principle because low-income individuals spend less on goods and services than do high-income individuals, yet pay the same sales tax rate.

Question 14

Table 18-10
   Table 18-10 shows the income tax brackets and tax rates for single taxpayers in Bauxhall.
-Refer to Table 18-10.A tax exemption is granted for the first $10,000 earned per year.Suppose you earn $75,000.
a.What is the amount of taxes you will pay?
b.What is your average tax rate?
c. What is your marginal tax rate?

Accepted Answer

a.($6,000 × 0.10)+ ($14,000 ×

Question 15

In the United States,taxpayers are allowed to exclude from taxation a certain amount of income,called

Accepted Answer

A)  the personal income exclusion. 
B)  the income allowance. 
C)  the income tax credit. 
D)  the personal exemption. 
A)  the personal income exclusion. 
B)  the income allowance. 
C)  the income tax credit. 
D)  the personal exemption.

Question 16

Some individuals seek to use government action to make themselves better off at the expense of others.The actions of these individuals

Accepted Answer

A)  are examples of fraud; but these individuals usually avoid prosecution because of logrolling and rational ignorance. 
B)  are examples of rent seeking. 
C)  offer proof that Adam Smith's "invisible hand" is not valid. 
D)  are evidence of the voting paradox. 
A)  are examples of fraud; but these individuals usually avoid prosecution because of logrolling and rational ignorance. 
B)  are examples of rent seeking. 
C)  offer proof that Adam Smith's "invisible hand" is not valid. 
D)  are evidence of the voting paradox.

Question 17

The federal corporate income tax is

Accepted Answer

A)  regressive. 
B)  proportional. 
C)  progressive. 
D)  unfair. 
A)  regressive. 
B)  proportional. 
C)  progressive. 
D)  unfair.

Question 18

The Arrow impossibility theorem states that

Accepted Answer

A)  no system of voting can be devised that will always consistently represent the underlying preferences of voters. 
B)  it is impossible for a majority voting system not to consistently represent the preferences of voters. 
C)  it is impossible to separate corporate desires from public bureaucracy. 
D)  no system of voting can be devised that will ensure a 100 percent voter turnout. 
A)  no system of voting can be devised that will always consistently represent the underlying preferences of voters. 
B)  it is impossible for a majority voting system not to consistently represent the preferences of voters. 
C)  it is impossible to separate corporate desires from public bureaucracy. 
D)  no system of voting can be devised that will ensure a 100 percent voter turnout.

Question 19

A Lorenz curve summarizes the information provided by a Gini coefficient.

Accepted Answer

A) True 
 B)False

Question 20

If you pay $2,000 in taxes on an income of $20,000,and a tax of $2,700 on an income of $30,000,then over this range of income the tax is

Accepted Answer

A)  regressive. 
B)  proportional. 
C)  progressive. 
D)  There is insufficient information to answer the question. 
A)  regressive. 
B)  proportional. 
C)  progressive. 
D)  There is insufficient information to answer the question.

What is a Lorenz curve and what is a Gini coefficient?

The average tax rate is calculated as

The public choice model asserts that the self-interest of policymakers is likely to cause them to take actions that are inconsistent with the preferences of voters,even where those preferences are clear.

A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises.

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

The government of Silverado raises revenue to operate the city's hospital,open to all residents,through a general income tax paid by its residents.This method of raising revenue is consistent with the benefits-received principle.

The term "payroll taxes" is often used to refer to

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

The actual division of a tax between buyers and sellers in a market is the excess burden of the tax.

Which of the following statements about the distribution of income in the United States is true?

The sales tax

In the United States,taxpayers are allowed to exclude from taxation a certain amount of income,called

Some individuals seek to use government action to make themselves better off at the expense of others.The actions of these individuals

The federal corporate income tax is

The Arrow impossibility theorem states that

A Lorenz curve summarizes the information provided by a Gini coefficient.

If you pay $2,000 in taxes on an income of $20,000,and a tax of $2,700 on an income of $30,000,then over this range of income the tax is

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

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

What is a Lorenz curve and what is a Gini coefficient?

The average tax rate is calculated as

The public choice model asserts that the self-interest of policymakers is likely to cause them to take actions that are inconsistent with the preferences of voters,even where those preferences are clear.

A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises.

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

The government of Silverado raises revenue to operate the city's hospital,open to all residents,through a general income tax paid by its residents.This method of raising revenue is consistent with the benefits-received principle.

The term "payroll taxes" is often used to refer to

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

The actual division of a tax between buyers and sellers in a market is the excess burden of the tax.

Which of the following statements about the distribution of income in the United States is true?

The sales tax

In the United States,taxpayers are allowed to exclude from taxation a certain amount of income,called

Some individuals seek to use government action to make themselves better off at the expense of others.The actions of these individuals

The federal corporate income tax is

The Arrow impossibility theorem states that

A Lorenz curve summarizes the information provided by a Gini coefficient.

If you pay $2,000 in taxes on an income of $20,000,and a tax of $2,700 on an income of $30,000,then over this range of income the tax is

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