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Exam 12: The Design of the Tax System

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Question 31

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Table 12-3 -Refer to Table 12-3.Assume that the price of a weekend ski pass is $38 and that the price reflects the actual unit cost of providing a weekend of skiing.Suppose the government imposes a tax of $15 on skiing,which raises the price of a weekend ski pass to $53.The deadweight loss associated with the tax is

A) $2.
B) $37.
C) $52.
D) $97.

E) C) and D)
F) A) and D)

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Question 32

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One advantage of a lump-sum tax over other taxes is that it

A) is both equitable and efficient.
B) doesn't cause deadweight loss.
C) would place a larger tax burden on the rich.
D) would raise more revenues.

E) B) and D)
F) C) and D)

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Question 33

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Scenario 12-2 Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket.In addition,suppose the price of a movie ticket is $5. -Refer to Scenario 12-2.Suppose the government levies a tax of $1 on a movie ticket and that,as a result,the price of a movie ticket increases to $6.If Bob and Lisa both purchase a movie ticket,what is the deadweight loss from the tax?

A person's tax liability refers to

Table 12-5 -Refer to Table 12-5.What is the average tax rate for a person who makes $60,000?

If Mary earns $80,000 in taxable income and pays $40,000 in taxes,her marginal tax rate must be 50 percent.

Of the following countries,which country's government collects the largest amount of tax revenue as a percentage of that country's total income?

Pat calculates that for every extra dollar she earns,she owes the government 33 cents.Her total income now is $35,000,on which she pays taxes of $7,000.Determine her average tax rate and her marginal tax rate.

If revenue from a gasoline tax is used to build and maintain public roads,the gasoline tax may be justified on the basis of

Scenario 12-1 Suppose Jim and Joan receive great satisfaction from their consumption of cheesecake.Joan would be willing to purchase only one slice and would pay up to $6 for it.Jim would be willing to pay $9 for his first slice,$7 for his second slice,and $3 for his third slice.The current market price is $3 per slice. -Refer to Scenario 12-1.How much consumer surplus does Joan receive from consuming her slice of cheesecake?

Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.

A lump-sum tax

The concept of a "welfare program" is most closely associated with which particular federal government program?

A budget surplus occurs when government receipts exceed government spending.

Which of the following describes a situation where tax laws give preferential treatment to specific types of behavior?

Some states do not have a state income tax.

If a poor family has three children in public school and a rich family has two children in private school,the benefits principle would suggest that

Deadweight losses arise because a tax causes some individuals to change their behavior.

Use Table A to complete Table B.

The concept that people should pay taxes based on the benefits they receive from government services is called