Question 1

Suppose the income tax rate is 0% on the first $10,000;10% on the next $20,000;20% on the next $20,000;30% on the next $20,000;and 40% on any income over $70,000.Family A earns $28,000 a year and Family B earns $65,000 a year.Both receive a ten percent raise,after which A's marginal tax rate is ________% and B's marginal tax rate is ________%.

Accepted Answer

The answer of Suppose the income tax rate is 0%...

Question 2

The provision of a legal system is an important economic function of the government because

Accepted Answer

A)  lawyers and judges tend to be high-income people.
B)  people need to feel safe when they go to work.
C)  the legal system affects how exchange takes place through its enforcement of contracts.
D)  the legal system affects the distribution of income by awarding damages in accident claims.E) C) and D)
F) B) and D)

Question 3

If corporate income taxes are collected on a firm's economic profit rather than its accounting profits,how will the firm change its output and price as a result?

Accepted Answer

Economic profits are returns to an activ...

Question 4

The marginal tax rate is equal to

Accepted Answer

A)  the average tax payment divided by the total tax payment.
B)  the percent of total income that goes to taxes.
C)  the change in the tax payment divided by the change in taxable income.
D)  the total tax payment divided by total income.E) A) and C)
F) A) and B)

Question 5

Suppose the income tax rate schedule is 0% on the first $10,000;10% on the next $20,000;20% on the next $20,000;30% on the next $20,000;and 40% on any income over $70,000.Family A earns $28,000 a year and Family B earns $65,000 a year.Both receive a ten percent raise.What is the marginal tax rate of each and what is the extra tax paid by each after the raise?

Accepted Answer

A)  Family A: 20% marginal tax rate and $560 in extra taxes.Family B: 40% marginal tax rate and $2,600 in extra taxes.
B)  Family A: 15% marginal tax rate and $420 in extra taxes;Family B: 35% marginal tax rate and $2,275 in extra taxes.
C)  Family A: 20% marginal tax rate and $360 in extra taxes;Family B: 40% marginal tax rate and $2,100 in extra taxes.
D)  Family A: 10% marginal tax rate and $280 in extra taxes;Family B: 30% marginal tax rate and $1,950 in extra taxes.E) All of the above
F) C) and D)

Question 6

One distinguishing characteristic of public goods is

Accepted Answer

A)  noncompetitive production.
B)  durability.
C)  exclusivity.
D)  non-rivalrous consumption.E) A) and D)
F) All of the above

Question 7

A consumption tax with an exemption for the first $20,000 of family consumption and a constant tax rate beyond that would be

Accepted Answer

A)  a proportional tax.
B)  a regressive tax.
C)  a progressive tax at low incomes and a regressive tax at high incomes.
D)  a progressive tax.E) B) and C)
F) A) and D)

Question 8

Scholarships awarded to students with high Grade Point Averages are an example of

Accepted Answer

A)  transfers in kind.
B)  transfer payments.
C)  public goods.
D)  externalities.E) B) and C)
F) A) and D)

Question 9

Someone who votes for an election candidate without thoroughly investigating the candidate's position on all issues

Accepted Answer

A)  is rational because the candidate probably won't share all of the voter's preferences anyway.
B)  is irrational because the candidate might not share all of the voter's preferences.
C)  is rational because it would be costly to determine all of the candidate's positions.
D)  is rationally ignorant if he expects the costs of gaining the information to be greater than benefits.E) B) and C)
F) A) and B)

Exam 10: The Public Sector

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Scholarships awarded to students with high Grade Point Averages are an example of

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Someone who votes for an election candidate without thoroughly investigating the candidate's position on all issues

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The marginal tax rate is equal to

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If corporate income taxes are collected on a firm's economic profit rather than its accounting profits,how will the firm change its output and price as a result?

Correct Answer
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Economic profits are returns to an activ...
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A consumption tax with an exemption for the first $20,000 of family consumption and a constant tax rate beyond that would be

Correct Answer
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The provision of a legal system is an important economic function of the government because

Correct Answer
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One distinguishing characteristic of public goods is

Correct Answer
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Exam 10: The Public Sector

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Scholarships awarded to students with high Grade Point Averages are an example of

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Someone who votes for an election candidate without thoroughly investigating the candidate's position on all issues

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The marginal tax rate is equal to

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If corporate income taxes are collected on a firm's economic profit rather than its accounting profits,how will the firm change its output and price as a result?

Correct AnswerverifiedEconomic profits are returns to an activ...View AnswerShow Answer

A consumption tax with an exemption for the first $20,000 of family consumption and a constant tax rate beyond that would be

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The provision of a legal system is an important economic function of the government because

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One distinguishing characteristic of public goods is

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Correct Answer
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Economic profits are returns to an activ...
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Correct Answer
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