Question

11. The goals of optimal income taxation include all of the following EXCEPT: a. maximizing tax revenue.

b. minimizing the distortions due to taxation.

c. maximizing the nation's social welfare function.

d. achieving vertical equity.

12. Suppose that the elasticities of demand for apples, bananas, and peaches are –0.9, –1.6, and –0.8, respectively. Assume that all else is identical in these three products and that an identical tax is levied on each good. Rank the products from highest to lowest in terms of the deadweight loss caused by the tax.

a. apples, bananas, peaches b. apples, peaches, bananas c. bananas, apples, peaches d. bananas, peaches, apples

13. Suppose your city's government is considering levying a tax on all commercial car washes within the city limits. The state government is also considering levying a tax on all commercial car washes in the state. In the short run, consumers bear _____ of the tax burden under the local tax than under the state tax. In the long run, car wash employees bear _____ of the tax burden under the local tax than under the state tax.

a. more; less b. more; more c. less; more d. less; less

14. In a labor market in which demand is perfectly elastic and supply is perfectly inelastic, who bears a tax levied on the firms?

a. only the workers

b. only the firms

c. both the workers and the firms, although the workers bear more of the tax d. both the workers and the firms, although the firms bear more of the tax

15. Suppose the wage of unskilled workers is equal to the minimum wage. If a tax on labor is levied on _____, the presence of the minimum wage _____.

a. workers; does not affect the tax burden of workers b. workers; reduces the tax burden of workers

c. firms; reduces the tax burden of firms

d. firms; does not affect the tax burden of firms

16. Suppose the pre-tax price of cigarettes is $3.00 per pack and the post-tax price is $4.00 per pack. The tax is $1.50 per pack and is paid to the government by cigarette retailers. Six hundred packs were sold prior to the tax increase; 500 were sold after the tax. What is the producer tax burden per pack of cigarettes?

a. $0.50

b. 100 packs c. $150

d. $1.50

17. Which statement is TRUE regarding a $1 per gallon tax on gasoline?

a. The consumer tax burden is greater when the tax is imposed on consumers.

b. The consumer tax burden is greater when the tax is imposed on the producers.

c. The producer tax burden is the same no matter on whom the tax is imposed.

d. The producer tax burden depends both on whom the tax is imposed and on the demand and supply elasticities.

18. A tax levied on producers is fully shifted to consumers when: a. demand is perfectly elastic.

b. demand is perfectly inelastic.

c. supply is perfectly inelastic.

d. supply and demand are both relatively elastic.

19. What is the goal of optimal commodity taxation?

a. setting taxes across commodities so that the ratio of marginal deadweight loss to marginal revenue

raised is equal across commodities

b. balancing the value of having another dollar in the government's hands with the value of leaving a dollar in the hands of the private sector

c. setting lower taxes on products with relatively inelastic demand and higher taxes on products with relatively elastic demand

d. taxing a wide variety of goods at a moderate rate rather than very few goods at a high rate

20. Which statement is TRUE when a good is taxed?

a. There is a deadweight loss.

b. The new equilibrium quantity is higher than the optimal amount. c. Firms produce more than the optimal amount of the good.

d. The price is reduced by the amount of the tax.

Answer 1

As per HOMEWORKLIB RULES we can answer only 1 question

11) Option A

Maximising tax revenue.

• The goal of optimial taxation include minimising the distortion due to taxation, the welfare functions of nation to be maximized, achieving vertical equality.
• Taxes are collected for government services. These taxes will cause distortion bcz of minimised social welfare. Peoples income will reduced.

The maximisation of tax revenue creates distortion hence its not the goal of optimal income taxation.