econ

Tax incidence focuses on who: has the most elastic demand. bears the statutory or legal burden of a tax. bears the economic burden of a tax. has the most inelastic supply.

bears the statutory or legal burden of a tax.

Which statement related to elasticity and tax incidence is NOT true? For products with an inelastic demand, the burden of the tax is borne almost entirely by the consumer. For products with an elastic demand, the burden of the tax is borne almost entirely by the producers. For products with an inelastic supply, the burden of the tax is borne almost entirely by the producers Parties with elastic demand or supply bear taxes; parties with inelastic demand or supply avoid them.

Parties with elastic demand or supply bear taxes; parties with inelastic demand or supply avoid them.

Which statement is TRUE regarding a $1 per gallon tax on gasoline? The producer tax burden is the same no matter on whom the tax is imposed. The producer tax burden depends both on whom the tax is imposed and on the demand and supply elasticities. The consumer tax burden is greater when the tax is imposed on the producers. The consumer tax burden is greater when the tax is imposed on consumers.

The producer tax burden is the same no matter on whom the tax is imposed.

Which statement regarding the source of federal government tax receipts from 1960 to 2005 is TRUE? The share of revenues coming from payroll taxes has risen significantly. The share of revenues coming from the corporate income tax has risen significantly. The share of revenues coming from each type of tax has remained unchanged. The share of revenues coming from the individual income tax has risen significantly.

The share of revenues coming from payroll taxes has risen significantly.

Which statement is TRUE when a good is taxed? The new equilibrium quantity is higher than the optimal amount The price is reduced by the amount of the tax. Firms produce more than the optimal amount of good. There is a deadweight loss.

There is a deadweight loss.

Which statement related to deadweight loss and efficient tax systems is NOT true? There will be large efficiency costs to moving from a progressive to a proportional tax system. The more that government imposes taxes on one source, the faster the deadweight loss rises. The efficiency cost of imposing a tax on imperfectly competitive firms is greater than the cost of imposing the same size tax on firms in a perfectly competitive market. The more a tax causes output in a market to decrease, the larger the deadweight loss.

There will be large efficiency costs to moving from a progressive to a proportional tax system.

In the absence of market failures, when the government taxes market participants, the effect is to move the market: away from the competitive equilibrium, thereby reducing social efficiency. closer to the competitive equilibrium, thereby enhancing social efficiency. away from the competitive equilibrium, thereby enhancing social efficiency. closer to the competitive equilibrium, thereby reducing social efficiency.

away from the competitive equilibrium, thereby reducing social efficiency.

The _____ surplus per unit _____ as more units are sold. consumer; decreases producer; increases producer; does not change consumer; does not change

consumer; decreases

All other things equal, the deadweight loss of a tax on producers is higher when supply is ________. All other things equal, the deadweight loss of a tax on producers is higher when demand is __________. inelastic; inelastic unit elastic; elastic elastic; elastic elastic; inelastic

elastic; elastic

The marginal deadweight loss of a tax: decreases as the tax rate increases. increases as the tax rate increases. increases, then decrease, as the tax rate increases. decreases, then increase, as the tax rate increases.

increases as the tax rate increases.

When a good or service is taxed, the: marginal benefit of the last unit produced exceeds the marginal cost of producing the unit. deadweight loss is greater when the tax is levied on consumers than when it is levied on producers. deadweight loss is greater when the tax is levied on producers than when it is levied on consumers. marginal cost of the last unit produced exceeds the marginal benefit of consuming the unit.

marginal benefit of the last unit produced exceeds the marginal cost of producing the unit.

The difference between what consumers pay and what producers receive (net of tax) from a transaction is called the: tax wedge. tax incidence. statutory incidence. producer burden.

tax wedge

The deadweight loss of a tax is larger when: the taxed product is produced by a monopolist. there is a negative consumption externality. there is a negative production externality. the demand for the product is perfectly inelastic.

the taxed product is produced by a monopolist.