Question 1

When a tax is levied on a good, the revenue the government collects is exactly equal to the loss of consumer and producer surplus from the tax.

Accepted Answer

False

Question 2

When a tax on a good starts small and is gradually increased, tax revenue will

Accepted Answer

C

Question 3

A tax for which high-income taxpayers pay a smaller fraction of their income than do low income taxpayers is known as

Accepted Answer

B

Question 4

The chief advantage of replacing personal income tax with a consumption tax is that it would remove the disincentive to saving that arises from the levying of personal income tax on income from savings.

Accepted Answer

The answer of The chief advantage of replacing personal income...

Question 5

A larger tax always generates a larger deadweight loss.

Accepted Answer

The answer of A larger tax always generates a larger...

Question 6

A larger tax always generates more tax revenue.

Accepted Answer

The answer of A larger tax always generates more tax...

Question 7

Mandla values a pair of blue jeans at R400. If the price is R350, Mandla buys the jeans and generates consumer surplus of R50. Suppose a tax is placed on blue jeans that causes the price of blue jeans to rise to R450. Now Mandla chooses not to buy a pair of jeans. This example has demonstrated

Accepted Answer

The answer of Mandla values a pair of blue jeans...

Question 8

If the supply curve is perfectly price elastic, a per unit tax

Accepted Answer

The answer of If the supply curve is perfectly price...

Question 9

Since the supply of undeveloped land is relatively inelastic, a tax on undeveloped land would generate

Accepted Answer

The answer of Since the supply of undeveloped land is...

Question 10

An efficient tax is one that generates minimal deadweight losses and minimal administrative burdens.

Accepted Answer

The answer of An efficient tax is one that generates...

Question 11

Lump-sum taxes are equitable but not efficient.

Accepted Answer

The answer of Lump-sum taxes are equitable but not efficient....

Question 12

A per unit tax on a good creates deadweight loss because

Accepted Answer

The answer of A per unit tax on a good...

Question 13

A tax collected from buyers generates a smaller deadweight loss than a tax collected from sellers.

Accepted Answer

The answer of A tax collected from buyers generates a...

Question 14

Deadweight loss is greatest when

Accepted Answer

The answer of Deadweight loss is greatest when
...

Question 15

A tax system with a low marginal tax rate generates less deadweight loss and is more efficient than a similar tax system with a higher marginal tax rate.

Accepted Answer

The answer of A tax system with a low marginal...

Question 16

If a tax is levied on a good in a market where supply is perfectly inelastic, there is no deadweight loss and the sellers bear the entire burden of the tax.

Accepted Answer

The answer of If a tax is levied on a...

Question 17

Which of the following is true with regard to a tax on labour income? Taxes on labour income tend to encourage

Accepted Answer

The answer of Which of the following is true with...

Question 18

When a tax distorts incentives to buyers and sellers so that fewer goods are produced and sold than otherwise, the tax has

Accepted Answer

The answer of When a tax distorts incentives to buyers...

Question 19

If a tax on a good is doubled, the deadweight loss from the tax

Accepted Answer

The answer of If a tax on a good is...

Question 20

In general, a tax raises the price the buyers pay, lowers the price the sellers receive, and reduces the quantity sold.

Accepted Answer

The answer of In general, a tax raises the price...

Quiz 9: The Tax System