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Exam 14: Taxation and Income Distribution

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Question 21

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An ad valorem tax is a fixed amount per unit of a commodity sold.

A) True
B) False
C) Uncertain

D) A) and B)
E) None of the above

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Question 22

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In the press, there has been a considerable amount of attention given to the notion of corporations being taxed. Explain how it is that a tax on a business could be borne entirely by consumers.

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Elasticity plays a key role in...

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Question 23

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How the tax system changes the distribution of income among capitalists, labourers, and landlords in referred to as

A subsidy on consumers will cause

Unit taxes cause pivots, while ad valorem taxes cause shifts.

Why is it the case that taxes in one market can have impacts on supply and demand in others and should policy makers take this into account when setting taxes?

Suppose there is a market that has market demand characterized as X = 30 - P/3. Suppose further that market supply can be written as X = P/2 - 2. (A)Find the equilibrium price and quantity in this market. (B)If a unit tax of $16 is imposed on good X, what are the equilibrium price, quantity, and tax revenue in the market? (C)Suppose an ad valorem tax of 30 percent is imposed on good X. The after-tax demand equation would be X = 30 - P/2. Now find the equilibrium price, quantity, and tax revenue in the market. (D)What can be said about the amount of tax revenue generated under each taxing scheme, and why

A demand curve that is perfectly inelastic is

An industry where the capital-labour ratio is relatively high is characterized as

In 2005, the top 1% based on family income faced the highest effective tax rates in Canada.

A lump sum tax is one for which the individual's tax liability does not depend upon behaviour.

Useful general equilibrium results can be obtained from models with ________ commodities, factors of production and no savings.

Taxes

A tax on suppliers will cause

The ease with which capital can be substituted for labour, or vice versa, is the

Partial factor taxes are levied on an input in only some of its uses.

Why is it the case that a commodity tax on goods like food and shelter is sometimes seen as being regressive?

Refer to the figure below. Suppose the original before-tax demand curve for champagne is P = 100 - 2Q_d. Suppose further that supply is P = 5 + 3Q_s. Now suppose a $5 unit tax is imposed on consumers. (A)What is the before-tax equilibrium price and quantity? (B)What is the after-tax equilibrium price and quantity? (C)How much tax revenue is raised?

The economic incidence of a tax is

Marginal tax rates supply reliable measures of tax progressiveness.