12 Micro Econ questions

Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15. Suppose the gov't levies a tax of $3 on each cigar, and the equilibrium price of a cigar increases to $18. How much tax revenue is collected? a. $0 b. $3 c. $6 d. $2

$3

Refer to table 12-11 If Al has taxable income of $165,000, his tax liability is a. 23,800 b. 36,000 c. 47,698 d. 45,000

45,000

Senator Finch argues that a tax must be paid by people who benefit from gov't services. Sen. Fudge argues that a tax must be paid in accordance with a person's ability to bear the tax burden. Sen. Malfoy argues that people with a greater ability to pay a tax should pay a larger amount. Sen. Moody argues that taxpayers with similar abilities to pay should contribute the same amount. Which Senator is advocating taxes based on a person's ability to pay? a. Malfoy and Moody b. Finch c. Fudge and Malfoy d. Moody

Fudge and Malfoy

Pat celebrates that for every extra dollar she earns, she owes the government 40 cents. Her total income now is $44,000, on which she pays taxes of $11,000. Determine her average tax rate and her marginal tax rate a. Her average tax rate is 25% and her marginal tax rate is 40% b. Her average tax rate is 40% and her marginal tax rate is 25% c. Her average tax rate is 40% and her marginal tax rate is 40% d. Her average tax rate is 25% percent and her marginal tax rate is 25%

Her average tax rate is 25% and her marginal tax rate is 40%

refer to table 12-9 Jake is a single person whose taxable income is $20,000 a year. What happened to his average tax rate between 2012 and 2013? a. It increased b. It didn't change c. It decreased d. Not enough information

It decreased

Suppose that the government taxes income in the following fashion: 30% of the first $20,000, 50% of the next $30,000, and 60% of all income over $50,000. Ted earns $40,000 and Robin earns $60,000. Which of the following statements is correct? a. Ted's marginal tax rate is 50%, and his average tax rate is 40% b. Ted's marginal tax rate is 60%, and his average tax rate is 50% c. Robin's marginal tax rate is 60%, and her average tax rate is 40% d. Robin's marginal tax rate is 50%, and her average tax rate is 45%

Ted's marginal tax rate is 50%, and his average tax rate is 40%

A lump-sum tax a. is the most fair tax b. is most frequently used to tax real property c. does not distort incentives d. distorts incentives more than any other type of tax

does not distort incentives

Because the marginal tax rate rises as income rises, a. lower income families in cereal pay a larger percentage of their income in taxes. b. a disproportionately large share of the tax burden falls upon the poor. c. higher income families, in general, pay a larger percentage of their income in taxes d. higher income families pay the same percentage of their income in taxes as lower-income families

higher income families, in general, pay a larger percentage of their income in taxes

State and local governments receive the largest portion of their tax revenues from a. income and property taxes b. property and sales taxes c. payroll and income taxes d. sales and income taxes

property and sales taxes

Refer to table 12-8 For an individual with $200,000 in taxable income, which tax schedule has the lowest average marginal tax rate? a. Schedule A b. Schedule B c. Schedule C d. Schedule D

schedule C