Chapter 14 Taxation and Income Distribution
Multiple Choice
1. Statutory incidence of a tax deals with
A) the amount of revenue left over after taxes.
B) the amount of taxes paid after accounting for inflation.
C) the person(s) legally responsible for paying the tax.
D) the amount of tax revenue generated after a tax is imposed.
Ans: c
2. Taxes
A) are mandatory payments.
B) are necessary for financing government expenditures.
C) do not directly relate to the benefit of government goods and services received.
D) are all of the above.
Ans: a
3. General equilibrium refers to
A) examining markets without specific information.
B) finding equilibrium from general information.
C) pricing goods at their shadow price.
D) all of the above.
E) none of the above.
Ans: e
4. A demand curve that is perfectly inelastic is
A) horizontal.
B) vertical.
C) at a 45 degree angle.
D) parallel to the X-axis.
Ans: b
5. In 2005, the top 1% of all income earners paid percent of federal taxes.
A) 1.0
B) 4.1
C) 20.6
D) 27.6
Ans: d
6. A tax on suppliers will cause the supply curve to shift
A) up.
, B) down.
C) right.
D) left.
Ans: d
7. A monopoly has seller(s) in the market.
A) 0
B) 1
C) 3
D) many
Ans: b
8. An ad valorem tax is
A) given as a proportion of the price.
B) Latin for “buyer beware.”
C) identical to a unit tax.
D) computed using the “inverse taxation rule.”
Ans: a
9. An industry where the capital-labor ratio is relatively high is characterized as
A) capital intensive.
B) labor intensive.
C) income intensive.
D) market intensive.
Ans: a
10. Demand for cigarettes is
A) relatively elastic.
B) relatively inelastic.
C) increasing in the US.
D) greater among wealthier people.
Ans: b
11. When marginal tax rates are constant,
A) the change in taxes paid is the same as the change in income.
B) the change in taxes paid is greater than the change in income.
C) the change in taxes paid is less than the change in income.
D) there are no taxes.
E) none of the above.
Ans: e
12. The tax-induced difference between the price paid by consumers and the price received by producers
is
A) the tax difference.
B) the tax wedge.
Multiple Choice
1. Statutory incidence of a tax deals with
A) the amount of revenue left over after taxes.
B) the amount of taxes paid after accounting for inflation.
C) the person(s) legally responsible for paying the tax.
D) the amount of tax revenue generated after a tax is imposed.
Ans: c
2. Taxes
A) are mandatory payments.
B) are necessary for financing government expenditures.
C) do not directly relate to the benefit of government goods and services received.
D) are all of the above.
Ans: a
3. General equilibrium refers to
A) examining markets without specific information.
B) finding equilibrium from general information.
C) pricing goods at their shadow price.
D) all of the above.
E) none of the above.
Ans: e
4. A demand curve that is perfectly inelastic is
A) horizontal.
B) vertical.
C) at a 45 degree angle.
D) parallel to the X-axis.
Ans: b
5. In 2005, the top 1% of all income earners paid percent of federal taxes.
A) 1.0
B) 4.1
C) 20.6
D) 27.6
Ans: d
6. A tax on suppliers will cause the supply curve to shift
A) up.
, B) down.
C) right.
D) left.
Ans: d
7. A monopoly has seller(s) in the market.
A) 0
B) 1
C) 3
D) many
Ans: b
8. An ad valorem tax is
A) given as a proportion of the price.
B) Latin for “buyer beware.”
C) identical to a unit tax.
D) computed using the “inverse taxation rule.”
Ans: a
9. An industry where the capital-labor ratio is relatively high is characterized as
A) capital intensive.
B) labor intensive.
C) income intensive.
D) market intensive.
Ans: a
10. Demand for cigarettes is
A) relatively elastic.
B) relatively inelastic.
C) increasing in the US.
D) greater among wealthier people.
Ans: b
11. When marginal tax rates are constant,
A) the change in taxes paid is the same as the change in income.
B) the change in taxes paid is greater than the change in income.
C) the change in taxes paid is less than the change in income.
D) there are no taxes.
E) none of the above.
Ans: e
12. The tax-induced difference between the price paid by consumers and the price received by producers
is
A) the tax difference.
B) the tax wedge.
