Chapter 10

a) Tax incidence refers to ____. b) Is the entire burden of the tax always borne by those on whom it is​ imposed?

a) who bears the burden of a tax. b) Not​ necessarily, since the burden of the tax depends on price elasticity.

Economies with lower taxes ____ production and ____ available social surplus. One possible cost of such economies is that the gap between the rich and poor may ____.

encourage , increase , increase

If the government levies a tax on​ consumers, what will be the tax​ incidence? Consumers will bear ____ percent of the tax burden.

100

a) The total tax payable for an individual who earns $450,000 a year is $____ b) The marginal tax rate is ____ percent c) The average tax rate is ____ percent

a) 135,963.75 b) 39.6 c) 30.21

a) The total tax payable for an individual who earns $500,000 a year is $____ b) The marginal tax rate is ____ percent c) The average tax rate is ____ percent

a) 155,763.75 b) 39.6 c) 31.15

a) The total tax payable for an individual who earns $350,000 a year is $____ b) The marginal tax rate is ____ percent c) The average tax rate is ____ percent

a) 99630.75 b) 33 c) 28.47

The graph given shows the supply (Qs=2P) and demand (Qd=18-P) for cigarettes. a) If there is no tax on​ cigarettes, the producer surplus is $____, the consumer surplus is $____, and the social surplus is $____ b) The tax of $6 on cigarettes will increase social surplus if ____

a) 36 , 72 , 108 b) there are negative externalities

In an​ economy, if the government implements a law for individuals that requires them to save at least​ 25% of their annual income in a social savings plan framed by the government. For supporting this​ plan, the government raises revenues by implementing income tax rates that are higher compared to the other countries. a) Which of the following will be a​ result(s) of this​ scenario? b) Which of the following arguments is not consistent with​ paternalism? c) Which of the following functions is beyond the scope of economics as far as government intervention is​ considered?

a) An increase in costs to the government. An increase in the deadweight losses. b) Individuals make choices that reflect their true preferences and know what is best for them. c) To make a value judgment on whether government is good or bad.

a) Which of the following are examples of inefficiencies created by government​ intervention? b) Which of the following is not a result of​ corruption?

a) Creating a large workforce of professionals who review whether the financial reports of companies are true and fair. Quality deterioration in a market after government implements a price control. b) Selling goods at a price that does not include taxes.

Ray earns an income of $225,000 per year in Country X. Suppose for the year 2014 there is a proportional tax rate of 20%. Also suppose for the year 2015 that the country follows the federal income tax​ bracket, as shown below. a) There will be ____ in the income tax paid by Ray in the year 2015 as compared to the year 2014 by ​$____ b) Government provides health services to individuals who are incapable of paying for it. c) Government issues bonds for the construction of a new plant that treats the waste products emitted from the big factories. d) Government increases taxes as a result of a budget deficit. e) Government increases taxes in order to pay the salary of the doctors working in government owned hospitals. f) Dereck sold his shop to Jazz who wants to open a new salon. Dereck had to pay taxes on the sale of his shop. This tax is levied by ____ g) The tax paid while purchasing a cocktail at a bar is levied by ____ h) ABC​ Ltd., is an international company that pays taxes every year on its profits. This particular tax is levied by ____

a) an increase , 12855.24 b) Redistributing funds via transfer payments. c) Raising revenues. d) Correcting market failures and externalities. e) Financing operations. f) the state and local governments. g) the federal government. h) the federal, state, and/or local governments.

a) Direct regulation is​ ____. b) Examples of direct regulation include ____.

a) direct actions by the government to control the amount of an activity. b) antismoking laws , price ceilings , zoning restrictions

a) The largest source of revenue for the federal government is​ ____. b) The sources of revenue for state and local governments are ____ those of the federal government. c) Which of the following is the largest source of revenue for state​ governments?

a) individual income taxes. b) different from c) Miscellaneous taxes and​ fees, such as tolls on roads and public transportation tickets.

a) Paternalism is the view that ____ b) Consumer sovereignty suggests that​ ____

a) people do not always know what is best for​ them, and government should encourage them to make the right choices. b) government should not interfere with consumer choices.

a) The price control set by the government in this situation is a ____ b) Using the line drawing tool​,draw a price control line and label it​ 'Price Control'. c) There is a possibility of forming a black market by the​ seller, if there is a ____ d) If a price floor is set below the free market equilibrium​ price, then the quantity demanded ____

a) price ceiling b) graph line below equilibrium c) price control d) remains unaffected

a) In an​ economy, the government sets a price control for a good. The suppliers notice that due to this price​ control, the consumers buy less of their good causing their inventories to rise. This price control set by the government is known as ____ b) Show this price control line on the​ graph, where the equilibrium price is Pm and equilibrium quantity is Q. Using the line drawing tool​,draw the price control line. c) If the implementation of a price control results in a deadweight​ loss, which of the following statements is​ true?

a) price floor b) graph line above equilibrium c) There is excess demand.

Britain taxed windows from 1696 until 1851. Under the 1747-1757 tax​ rates, you would pay no tax if your home had 0-9 windows, but if your home had 10-14 windows you would pay a tax of 6 pence per window for every window in your home. a) The window tax is similar to the U.S. income tax in that both are​ ____. b) The window tax is different from the U.S. income tax in that as windows​ increase, ____ c) Do you think from 1747-1757 the number of new homes with 9 or fewer windows increased from the​ pre-1747 days?

a) progressive taxes. b) Britain's window tax increases for all​ windows, and as income​ increases, the U.S. income tax rate increases on marginal income. c) Yes, because the marginal cost of having more windows increased.

There is ____ a​ trade-off between equality and social surplus.

sometimes