Question 1

Which of the following statements is correct?

Accepted Answer

A)  Equity is more important than efficiency as a goal of the tax system.
B)  Efficiency is more important than equity as a goal of the tax system.
C)  Both equity and efficiency are important goals of the tax system.
D)  Neither equity nor efficiency is an important goal of the tax system.E) A) and B)
F) C) and D)

Question 2

A tax levied on the total amount spent in retail stores is called

Accepted Answer

A)  a sales tax.
B)  an excise tax.
C)  a retail tax.
D)  an income tax.E) B) and D)
F) C) and D)

Question 3

Table 12-2
Consider the tax rates shown in the table below.
  Tax Rate  Income Range 8%0−15,00016%15,000−35,00024%35,000−75,00034%75,000−145,00036%145,000−330,00038% over 330,000\begin{array} { | c | c | } \hline 	ext { Tax Rate } & 	ext { Income Range } \\hline 8 \% & 0 - 15,000 \\hline 16 \% & 15,000 - 35,000 \\hline 24 \% & 35,000 - 75,000 \\hline 34 \% & 75,000 - 145,000 \\hline 36 \% & 145,000 - 330,000 \\hline 38 \% & 	ext { over } 330,000 \\hline\end{array} Tax Rate 8%16%24%34%36%38%​ Income Range 0−15,00015,000−35,00035,000−75,00075,000−145,000145,000−330,000 over 330,000​​ 
-Refer to Table 12-2.If Mateo has taxable income of 165,000 dinar,his marginal tax rate is

Accepted Answer

A)  16%.
B)  24%.
C)  34%.
D)  36%. E) B) and D)
F) All of the above

Question 4

Tim earns income of 60,000 dinars per year and pays 21,000 per year in taxes.Tim paid 20 percent in taxes on the first 30,000 he earned.What was the marginal tax rate on the second 30,000 he earned?

Accepted Answer

A)  20 percent
B)  30 percent
C)  50 percent
D)  70 percentE) C) and D)
F) B) and D)

Question 5

Zoe,Chloe,and Brody each like to read novels.The current mystery thriller costs 10 dinars.Zoe values it at 15 dinars,Chloe at 13 dinars,and Brody at 11 dinars.Suppose that if the government taxes books at 0.50dinarseach,the selling price rises to 10.50 dinars.A consequence of the tax is that

Accepted Answer

A)  consumer surplus shrinks by 1.50 and tax revenues increase by 1.50,so there is no deadweight loss.
B)  consumer surplus shrinks by 9.00 and tax revenues increase by 1.50,so there is a deadweight loss of 7.50.
C)  consumer surplus shrinks by 7.50 and tax revenues increase by 7.50,so there is no deadweight loss.
D)  consumer surplus shrinks by 7.50 and tax revenues increase by 1.50,so there is a deadweight loss of 6.E) B) and C)
F) None of the above

Question 6

Which of the following statements is correct?

Accepted Answer

A)  The average tax rate gauges the sacrifice made by a taxpayer,whereas the marginal tax rate gauges the distortion of taxes on consumer decisions.
B)  The marginal tax rate gauges the sacrifice made by a taxpayer,whereas the average tax rate gauges the distortion of taxes on consumer decisions.
C)  The average tax rate measures how much the tax system discourages people from working.
D)  The marginal tax rate measures total taxes paid divided by total income.E) A) and D)
F) B) and C)

Question 7

You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) a person with no income would pay no taxes,and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person.Which of the following statements is correct?

Accepted Answer

A)  A lump-sum tax would achieve the second goal but not the first.
B)  A regressive tax would achieve the second goal but not the first.
C)  A progressive tax could achieve both goals.
D)  A proportional tax could achieve the second goal but not the first.E) A) and C)
F) A) and B)

Question 8

Special tax treatment given to specific types of behavior are called

Accepted Answer

A)  tax avoidance.
B)  tax evasion.
C)  tax loopholes.
D)  tax burden.E) A) and D)
F) All of the above

Question 9

A person's tax obligation divided by her income is called her

Accepted Answer

A)  marginal social tax rate.
B)  marginal private tax rate.
C)  marginal tax rate.
D)  average tax rate.E) None of the above
F) A) and D)

Question 10

A consumption tax is a tax on

Accepted Answer

A)  goods but not on services.
B)  the amount of income that people spend.
C)  the amount of income that people earn.
D)  the amount of income that people save.E) A) and B)
F) A) and C)

Question 11

A recent increase in federal gasoline taxes was estimated to cause a $150 million reduction in the total surplus (consumer plus producer surplus)in the gasoline market.If tax revenues increased by $100 million,what is the deadweight loss associated with the tax?
 As a result of the tax,10,000 people sold their cars and started riding their bicycles to work.How much of the burden of the deadweight loss is incurred by the bicycle riders?

Accepted Answer

The direct deadweight loss is $50 millio...

Exam 12: The Design of the Tax System

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The direct deadweight loss is $50 millio...
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Which of the following statements is correct?

Correct Answer
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Zoe,Chloe,and Brody each like to read novels.The current mystery thriller costs 10 dinars.Zoe values it at 15 dinars,Chloe at 13 dinars,and Brody at 11 dinars.Suppose that if the government taxes books at 0.50dinarseach,the selling price rises to 10.50 dinars.A consequence of the tax is that

Correct Answer
verified

A tax levied on the total amount spent in retail stores is called

Correct Answer
verified

A consumption tax is a tax on

Correct Answer
verified

A person's tax obligation divided by her income is called her

Correct Answer
verified

Special tax treatment given to specific types of behavior are called

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
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You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) a person with no income would pay no taxes,and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person.Which of the following statements is correct?

Correct Answer
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Correct Answer
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Tim earns income of 60,000 dinars per year and pays 21,000 per year in taxes.Tim paid 20 percent in taxes on the first 30,000 he earned.What was the marginal tax rate on the second 30,000 he earned?

Correct Answer
verified

Exam 12: The Design of the Tax System

Correct AnswerverifiedThe direct deadweight loss is $50 millio...View AnswerShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Zoe,Chloe,and Brody each like to read novels.The current mystery thriller costs 10 dinars.Zoe values it at 15 dinars,Chloe at 13 dinars,and Brody at 11 dinars.Suppose that if the government taxes books at 0.50dinarseach,the selling price rises to 10.50 dinars.A consequence of the tax is that

Correct AnswerverifiedShow Answer

A tax levied on the total amount spent in retail stores is called

Correct AnswerverifiedShow Answer

A consumption tax is a tax on

Correct AnswerverifiedShow Answer

A person's tax obligation divided by her income is called her

Correct AnswerverifiedShow Answer

Special tax treatment given to specific types of behavior are called

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) a person with no income would pay no taxes,and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Tim earns income of 60,000 dinars per year and pays 21,000 per year in taxes.Tim paid 20 percent in taxes on the first 30,000 he earned.What was the marginal tax rate on the second 30,000 he earned?

Correct AnswerverifiedShow Answer

Correct Answer
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The direct deadweight loss is $50 millio...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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