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

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

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

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

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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

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bA + B + C + D

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c A + D

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d B + C + E + F

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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

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bA

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c B

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dC

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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

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bA + B + C + D

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cA

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dD

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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

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bD

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c C + F

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d C + D + F

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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

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bProgressive income taxes used to pay for national defense

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c Petrol taxes used to pay for roads

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

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A tax system is regarded as horizontally equitable if ?


aall taxpayers pay the same amount of tax

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btaxes on all goods are levied at the same rate

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cthe system comprises only lump sum taxes

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dtaxpayers with similar abilities to pay taxes pay the same amount

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


aProportional tax rate

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baverage tax rate

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cmarginal tax rate

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d vertical tax rate

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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

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b progressive

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cregressive

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dproportional

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View Answer progressive

The average tax rate is ?


atotal taxes paid divided by total income

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bthe extra taxes paid on an additional dollar or income.

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c the taxes paid by the marginal worker

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d total income divided by total taxes paid

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