Economics MCQs

Page No. 359

Refer to Exhibit 4. Which of the following is true with regard to the burden of the tax in Exhibit 4 ?


aThe buyers pay a larger portion of the tax because demand is more inelastic than supply


bThe sellers pay a larger portion of the tax because supply is more elastic than demand


cThe buyers pay a larger portion of the tax because demand is more elastic then supply


d The sellers pay a larger portion of the tax because supply is more inelastic than demand



Refer to Exhibit 4. If a tax is placed on the product in this market total surplus is the area ?


aA + B + C + D+ E +F


bA + B + C + D


c A + D


d B + C + E + F


View Answer A + B + C + D

Refer to Exhibit 4. If a tax is placed on the product in this market tax revenue paid by the sellers is the area ?


a C + F


bA


c B


dC


View Answer C

Refer to Exhibit 4. If a tax is placed on the product in this market, producer surplus is the area?


aA + B + E


bA + B + C + D


cA


dD


View Answer D

Refer to Exhibit 4. If there is no tax placed on the product in this market, producer surplus is the area ?


aA + B + E


bD


c C + F


d C + D + F


View Answer C + D + F

Which of the following taxes can be supported by the benefits principle of taxation ?


aAll these answers can be supported by the benefits principle of taxation


bProgressive income taxes used to pay for national defense


c Petrol taxes used to pay for roads


d property taxes used to pay for policies and the court system



A tax system is regarded as horizontally equitable if ?


aall taxpayers pay the same amount of tax


btaxes on all goods are levied at the same rate


cthe system comprises only lump sum taxes


dtaxpayers with similar abilities to pay taxes pay the same amount



The appropriate tax rate to consider gauging how much the tax system distorts incentives and decision making is the ?


aProportional tax rate


baverage tax rate


cmarginal tax rate


d vertical tax rate


View Answer marginal tax rate

The ability-to-pay principle of taxation suggests that if a tax system is to be vertically equitable it should be ?


a efficient


b progressive


cregressive


dproportional


View Answer progressive

The average tax rate is ?


atotal taxes paid divided by total income


bthe extra taxes paid on an additional dollar or income.


c the taxes paid by the marginal worker


d total income divided by total taxes paid



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