Question 1

Table 12-4 
-Refer to Table 12-4. What is the marginal tax rate for a person who makes $130,000?

Accepted Answer

A)  30%
B)  40%
C)  50%
D)  60%E) C) and D)
F) A) and B)

Question 2

When government receipts exceed total government spending during a fiscal year, the difference is

Accepted Answer

A)  a budget surplus.
B)  a budget deficit.
C)  the national debt.
D)  automatically refunded.E) B) and C)
F) A) and B)

Question 3

An advantage of a consumption tax over the present tax system is that a consumption tax

Accepted Answer

A)  raises more revenues.
B)  would save the government millions in administrative costs.
C)  places more of the tax burden on the wealthy.
D)  does not discourage saving.E) B) and C)
F) All of the above

Question 4

Table 12-10 
-Refer to Table 12-10. If Si has $100,000 in taxable income, his average tax rate is

Accepted Answer

A)  13.7%.
B)  15.2%.
C)  21.7%.
D)  28.3%.E) A) and D)
F) A) and C)

Question 5

If a tax takes a smaller fraction of income as income rises, it is

Accepted Answer

A)  proportional.
B)  regressive.
C)  progressive.
D)  based on the ability-to-pay principle.E) C) and D)
F) None of the above

Question 6

When the total surplus lost as a result of a tax is less than the amount of tax revenue collected by the government there is a deadweight loss.

Accepted Answer

A) True 
 B)False

Question 7

Who pays a corporate income tax?

Accepted Answer

A)  owners of the corporation
B)  customers of the corporation
C)  workers of the corporation
D)  All of the above are correct.E) All of the above
F) B) and C)

Question 8

Scenario 12-2
Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket. In addition, suppose the price of a movie ticket is $5.
-Refer to Scenario 12-2. Suppose the government levies a tax of $1 on a movie ticket and that, as a result, the price of a movie ticket increases to $6. If Bob and Lisa both purchase a movie ticket, what is the deadweight loss from the tax?

Accepted Answer

A)  $0
B)  $1
C)  $2
D)  $3E) A) and C)
F) B) and C)

Question 9

Table 12-22 
-Refer to Table 12-22. A proportional tax is illustrated by tax

Accepted Answer

A)  A.
B)  B.
C)  C.
D)  D.E) A) and B)
F) C) and D)

Question 10

A country is using a proportional tax when

Accepted Answer

A)  its marginal tax rate equals its average tax rate.
B)  its marginal tax rate is less than its average tax rate.
C)  its marginal tax rate is greater than its average tax rate.
D)  it uses a lump-sum tax.E) A) and D)
F) C) and D)

Question 11

A payroll tax is a tax on

Accepted Answer

A)  the wages that a firm pays its workers.
B)  earned and unearned income.
C)  specific goods like gasoline and cigarettes.
D)  corporate profits.E) B) and C)
F) None of the above

Question 12

Sue earns income of $80,000 per year. Her average tax rate is 40 percent. Sue paid $4,500 in taxes on the first $30,000 she earned. What was the marginal tax rate on the rest of her income?

Accepted Answer

A)  15 percent
B)  32 percent
C)  40 percent
D)  55 percentE) None of the above
F) All of the above

Question 13

Which of the following statements is not correct?

Accepted Answer

A)  A gasoline tax can be an example of a tax that uses the benefits principle.
B)  A progressive tax attempts to achieve vertical equity.
C)  A progressive tax can be an example of the ability-to-pay principle.
D)  A regressive tax attempts to achieve vertical equity.E) B) and D)
F) All of the above

Question 14

In 2011, approximately what percentage of the U.S. federal government's receipts came from individual income taxes?

Accepted Answer

A)  9%
B)  15%
C)  43%
D)  67%E) C) and D)
F) None of the above

Question 15

Taxes create deadweight loss when they

Accepted Answer

A)  distort behavior.
B)  cause the price of the product to increase.
C)  don't raise sufficient government revenue.
D)  cannot be computed easily.E) B) and D)
F) B) and C)

Question 16

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013. 
-Refer to Table 12-9. Samantha is a single person whose taxable income is $100,000 a year. What is her average tax rate in 2012?

Accepted Answer

A)  22.3%
B)  25.3%
C)  27.8%
D)  28.4%E) A) and D)
F) A) and C)

Question 17

Scenario 12-3
Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $8 for it. Roger would be willing to pay $11 for his first slice, $9 for his second slice, and $5 for his third slice. The current market price is $5 per slice.
-Refer to Scenario 12-3. How much total consumer surplus do Regina and Roger collectively receive from consuming cheesecake?

Accepted Answer

A)  $3
B)  $6
C)  $9
D)  $13E) A) and C)
F) A) and B)

Question 18

If a government simplified its tax system the likeliest result would be a decrease in

Accepted Answer

A)  consumer surplus.
B)  producer surplus.
C)  in deadweight loss.
D)  tax revenues.E) B) and D)
F) A) and B)

Question 19

Suppose Hillary values a large order of French fries at $4. Bill values a large order of French fries at $7. The pre-tax price of a large order of French fries is $2. The government imposes a "fat tax" of $3 on each large order of French fries, and the price rises to $5. The deadweight loss from the tax is

Accepted Answer

A)  $4, and the deadweight loss comes from both Hillary and Bill.
B)  $4, and the deadweight loss comes only from Hillary because she does not buy a large French fries after the tax.
C)  $2, and the deadweight loss comes from both Hillary and Bill.
D)  $2, and the deadweight loss comes only from Hillary because she does not buy a large French fries after the tax.E) A) and D)
F) B) and C)

Question 20

Some colleges charge all students the same fee for a weekly dining services meal plan. Suppose that students differ by how much food they consume each week. For example, members of the women's swimming team consume, on average, twice as much food as the average female college student, and the average male college student consumes 20 percent more food than the average female college student. The dining services fee is most like a(n)

Accepted Answer

A)  excise tax that conforms to the benefits principle.
B)  excise tax that violates the benefits principle.
C)  lump-sum tax that conforms to the benefits principle.
D)  lump-sum tax that violates the benefits principle.E) A) and B)
F) None of the above

Exam 12: The Design of the Tax System

Who pays a corporate income tax?

Correct Answer
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Table 12-22 -Refer to Table 12-22. A proportional tax is illustrated by tax

Correct Answer
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Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Samantha is a single person whose taxable income is $100,000 a year. What is her average tax rate in 2012?

Correct Answer
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Correct Answer
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A payroll tax is a tax on

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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An advantage of a consumption tax over the present tax system is that a consumption tax

Correct Answer
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A country is using a proportional tax when

Correct Answer
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Correct Answer
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Correct Answer
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Sue earns income of $80,000 per year. Her average tax rate is 40 percent. Sue paid $4,500 in taxes on the first $30,000 she earned. What was the marginal tax rate on the rest of her income?

Correct Answer
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Taxes create deadweight loss when they

Correct Answer
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Correct Answer
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When government receipts exceed total government spending during a fiscal year, the difference is

Correct Answer
verified

If a tax takes a smaller fraction of income as income rises, it is

Correct Answer
verified

When the total surplus lost as a result of a tax is less than the amount of tax revenue collected by the government there is a deadweight loss.

Correct Answer
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Table 12-4 -Refer to Table 12-4. What is the marginal tax rate for a person who makes $130,000?

Correct Answer
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Table 12-10 -Refer to Table 12-10. If Si has $100,000 in taxable income, his average tax rate is

Correct Answer
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If a government simplified its tax system the likeliest result would be a decrease in

Correct Answer
verified

In 2011, approximately what percentage of the U.S. federal government's receipts came from individual income taxes?

Correct Answer
verified

Exam 12: The Design of the Tax System

Who pays a corporate income tax?

Correct AnswerverifiedShow Answer

Table 12-22 -Refer to Table 12-22. A proportional tax is illustrated by tax

Correct AnswerverifiedShow Answer

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Samantha is a single person whose taxable income is $100,000 a year. What is her average tax rate in 2012?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A payroll tax is a tax on

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

An advantage of a consumption tax over the present tax system is that a consumption tax

Correct AnswerverifiedShow Answer

A country is using a proportional tax when

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Sue earns income of $80,000 per year. Her average tax rate is 40 percent. Sue paid $4,500 in taxes on the first $30,000 she earned. What was the marginal tax rate on the rest of her income?

Correct AnswerverifiedShow Answer

Taxes create deadweight loss when they

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When government receipts exceed total government spending during a fiscal year, the difference is

Correct AnswerverifiedShow Answer

If a tax takes a smaller fraction of income as income rises, it is

Correct AnswerverifiedShow Answer

When the total surplus lost as a result of a tax is less than the amount of tax revenue collected by the government there is a deadweight loss.

Correct AnswerverifiedShow Answer

Table 12-4 -Refer to Table 12-4. What is the marginal tax rate for a person who makes $130,000?

Correct AnswerverifiedShow Answer

Table 12-10 -Refer to Table 12-10. If Si has $100,000 in taxable income, his average tax rate is

Correct AnswerverifiedShow Answer

If a government simplified its tax system the likeliest result would be a decrease in

Correct AnswerverifiedShow Answer

In 2011, approximately what percentage of the U.S. federal government's receipts came from individual income taxes?

Correct AnswerverifiedShow Answer

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