Question 1

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) B) and D)
F) A) and B)

Question 2

Suppose the government taxes 10 percent of the first $30,000 in income and 20 percent of all income over $30,000.
Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Accepted Answer

The marginal tax rate would be 20 percen...

Question 3

Table 12-5 
-Refer to Table 12-5. What is the marginal tax rate for a person who makes $37,000?

Accepted Answer

A)   20%
B)   9.25%
C)   25%
D)   40%E) A) and B)
F) A) and C)

Question 4

A family's tax liability is the amount of money it owes in taxes.

Accepted Answer

A) True 
 B)False

Question 5

For state and local governments, in 2011, education accounted for approximately what percentage of spending?

Accepted Answer

A)   25 percent
B)   34 percent
C)   50 percent
D)   75 percentE) B) and C)
F) None of the above

Question 6

The three largest categories of spending by the Federal government in order from first to third would be

Accepted Answer

A)   income security, net interest, and national defense
B)   national defense, net interest, and income security
C)   income security, health, and national defense
D)   health, income security, and national defenseE) None of the above
F) C) and D)

Question 7

According to the benefits principle, it is fair for people to pay taxes based on their ability to shoulder the tax burden.

Accepted Answer

A) True 
 B)False

Question 8

The government finances the budget deficit by

Accepted Answer

A)   borrowing from the public.
B)   borrowing solely from the Federal Reserve Bank.
C)   printing currency in the amount of the budget deficit.
D)   requiring that budget surpluses occur every other year to pay off the deficits.E) A) and C)
F) A) and D)

Question 9

An optimal tax is one that minimizes the

Accepted Answer

A)   external benefit.
B)   total deadweight loss from the tax.
C)   income taxes.
D)   horizontal equity.E) A) and C)
F) A) and B)

Question 10

Which tax system requires all taxpayers to pay the same percentage of their income in taxes?

Accepted Answer

A)   a regressive tax
B)   a proportional tax
C)   a progressive tax
D)   a horizontal equity taxE) None of the above
F) B) and D)

Question 11

Which type of tax is used to finance the Social Security program in the United States?

Accepted Answer

A)   consumption tax
B)   income tax
C)   payroll tax
D)   property taxE) C) and D)
F) B) and C)

Question 12

Define the average tax rate.

Accepted Answer

The average tax rate...

Question 13

Deadweight losses occur in markets in which

Accepted Answer

A)   firms decide to downsize.
B)   the government imposes a tax.
C)   profits fall because of low consumer demand.
D)   equilibrium prices fall.E) B) and C)
F) B) and D)

Question 14

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013. 
-Refer to Table 12-9. Bill is a single person whose taxable income is $35,000 a year. What is his average tax rate in 2013?

Accepted Answer

A)   15.3%
B)   17.6%
C)   21.3%
D)   24.8%E) B) and D)
F) B) and C)

Question 15

Which of the following is an example of a payroll tax?

Accepted Answer

A)   a tax on the wages that a firm pays its workers
B)   a "sin" tax on distilled alcohol
C)   a tax on corporate profits
D)   the portion of federal income taxes earmarked to pay for national defenseE) A) and C)
F) None of the above

Question 16

If your income is $50,000, your income tax liability is $10,000, and you paid $0.25 in taxes on the last dollar you earned, your

Accepted Answer

A)   marginal tax rate is 20 percent.
B)   average tax rate is 5 percent.
C)   marginal tax rate is 25 percent.
D)   average tax rate is 25 percent.E) All of the above
F) A) and D)

Question 17

Scenario 12-1
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.
-Refer to Scenario 12-1. Suppose the government levies a tax of $1 on each cigar, and the equilibrium price of a cigar increases to $16. What is total consumer surplus after the tax is levied?

Accepted Answer

A)   $2
B)   $3
C)   $4
D)   $5E) C) and D)
F) B) and D)

Question 18

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) B) and C)

Question 19

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013. 
-Refer to Table 12-9. Bill is a single person whose taxable income is $35,000 a year. What is his average tax rate in 2012?

Accepted Answer

A)   17.6%
B)   20.5%
C)   21.3%
D)   26.2%E) A) and B)
F) A) and C)

Question 20

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013. 
-Refer to Table 12-9. Bill is a single person whose taxable income is $35,000 a year. What happened to his average tax rate between 2012 and 2013?

Accepted Answer

A)   It increased.
B)   It decreased.
C)   It did not change.
D)   We do not have enough information to answer this question.E) None of the above
F) All of the above

Exam 12: The Design of the Tax System

Suppose the government taxes 10 percent of the first $30,000 in income and 20 percent of all income over $30,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Correct Answer
verified
The marginal tax rate would be 20 percen...
View Answer

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Bill is a single person whose taxable income is $35,000 a year. What happened to his average tax rate between 2012 and 2013?

Correct Answer
verified

Define the average tax rate.

Correct Answer
verified
The average tax rate...
View Answer

Which of the following is an example of a payroll tax?

Correct Answer
verified

If your income is $50,000, your income tax liability is $10,000, and you paid $0.25 in taxes on the last dollar you earned, your

Correct Answer
verified

According to the benefits principle, it is fair for people to pay taxes based on their ability to shoulder the tax burden.

Correct Answer
verified

Deadweight losses occur in markets in which

Correct Answer
verified

Table 12-5 -Refer to Table 12-5. What is the marginal tax rate for a person who makes $37,000?

Correct Answer
verified

The three largest categories of spending by the Federal government in order from first to third would be

Correct Answer
verified

A family's tax liability is the amount of money it owes in taxes.

Correct Answer
verified

For state and local governments, in 2011, education accounted for approximately what percentage of spending?

Correct Answer
verified

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Bill is a single person whose taxable income is $35,000 a year. What is his average tax rate in 2013?

Correct Answer
verified

Correct Answer
verified

The government finances the budget deficit by

Correct Answer
verified

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Bill is a single person whose taxable income is $35,000 a year. What is his average tax rate in 2012?

Correct Answer
verified

An optimal tax is one that minimizes the

Correct Answer
verified

Which tax system requires all taxpayers to pay the same percentage of their income in taxes?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Which type of tax is used to finance the Social Security program in the United States?

Correct Answer
verified

Exam 12: The Design of the Tax System

Suppose the government taxes 10 percent of the first $30,000 in income and 20 percent of all income over $30,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Correct AnswerverifiedThe marginal tax rate would be 20 percen...View AnswerShow Answer

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Bill is a single person whose taxable income is $35,000 a year. What happened to his average tax rate between 2012 and 2013?

Correct AnswerverifiedShow Answer

Define the average tax rate.

Correct AnswerverifiedThe average tax rate...View AnswerShow Answer

Which of the following is an example of a payroll tax?

Correct AnswerverifiedShow Answer

If your income is $50,000, your income tax liability is $10,000, and you paid $0.25 in taxes on the last dollar you earned, your

Correct AnswerverifiedShow Answer

According to the benefits principle, it is fair for people to pay taxes based on their ability to shoulder the tax burden.

Correct AnswerverifiedShow Answer

Deadweight losses occur in markets in which

Correct AnswerverifiedShow Answer

Table 12-5 -Refer to Table 12-5. What is the marginal tax rate for a person who makes $37,000?

Correct AnswerverifiedShow Answer

The three largest categories of spending by the Federal government in order from first to third would be

Correct AnswerverifiedShow Answer

A family's tax liability is the amount of money it owes in taxes.

Correct AnswerverifiedShow Answer

For state and local governments, in 2011, education accounted for approximately what percentage of spending?

Correct AnswerverifiedShow Answer

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Bill is a single person whose taxable income is $35,000 a year. What is his average tax rate in 2013?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The government finances the budget deficit by

Correct AnswerverifiedShow Answer

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Bill is a single person whose taxable income is $35,000 a year. What is his average tax rate in 2012?

Correct AnswerverifiedShow Answer

An optimal tax is one that minimizes the

Correct AnswerverifiedShow Answer

Which tax system requires all taxpayers to pay the same percentage of their income in taxes?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which type of tax is used to finance the Social Security program in the United States?

Correct AnswerverifiedShow Answer

Correct Answer
verified
The marginal tax rate would be 20 percen...
View Answer

Correct Answer
verified

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verified
The average tax rate...
View Answer

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