Tax Assignment

The Laffer Curve indicates that an increase in tax rates will always lead to an increase in tax revenues.

false

a tax imposed on the sellers of a good will __ the price paid by buyers and __ the equilibrium quantity

raise; lower

If a $500 tax is placed legally (statutorily) on the sellers of new suits and as a result the price of suits to consumers rises by $400, then the actual burden of the tax is $__ on suit buyers and $__ on sellers.

400; 100

If the government wants to raise tax revenue and shift most of the tax burden to the sellers it would impose a tax on a good with an __ demand curve and an __ supply curve.

elastic; inelastic

The actual burden of a tax is determined primarily by the legal (or statutory) assignment of the tax.

false

The actual burden of a tax is determined primarily by the number of exchanges that are eliminated from the market as a result of the tax.

false

a tax on the buyers of coffee will __ the price of coffee paid by buyers, __ the net price of coffee received by sellers, and __ the equilibrium quantity of coffee

increase; decrease; decrease

Suppose that a tax is placed on a particular good. If the buyers end up bearing most of the tax burden, this indicates that the demand is more __ than the supply.

inelastic

A deadweight loss results from the imposition of a tax on a good because the tax reduces the quantity of exchanges between buyers and sellers.

true

The Laffer curve indicates that when tax rates are high, an increase in tax rates is likely to a decrease in tax revenues.

true

The actual incidence (or burden) of a tax refers to the governmental agency responsible for collecting the tax.

false

According to the Laffer curve, when marginal tax rates are low, an increase in tax rates is likely to cause tax revenues to __ ; when marginal tax rates are high, an increase in tax rates is likely to cause tax revenues to __ .

increase; decrease