Tax Incidence

Question 1

direct tax

Answer 1

tax on income and wealth

Question 2

How are direct taxes paid to government?

Answer 2

directly and without intermediary

Question 3

Can direct taxes be adjusted?

Answer 3

yes - adjust rate based on income

Question 4

indirect tax

Answer 4

tax on the production and consumption of goods and services

Question 5

Who bears the burden of indirect taxes?

Answer 5

shared by consumers and producers

Question 6

How are indirect taxes paid to government?

Answer 6

through intermediaries such as producers

Question 7

sales tax

Answer 7

tax placed on a good when it is sold as a final good to a consumer

Question 8

Are sales taxes changing?

Answer 8

yes based on retail value of good

Question 9

ad valorem tax

Answer 9

tax placed on every transaction in the production life of good

Question 10

How is an ad valorem tax different to a sales tax?

Answer 10

charged to every transformative stage of produciton where good is exchanged and ownership changed

Question 11

Do ad valorem taxes change?

Answer 11

yes based on retail value

Question 12

What are the other names for per-unit tax?

Answer 12

specific tax excise tax

Question 13

per-unit tax

Answer 13

tax where a fixed amount of money per good is charged

Question 14

tariff

Answer 14

tax on imported goods, levied upon entry into a country

Question 15

What are the other names for tariff?

Answer 15

custorms duty impost

Question 16

Are tariffs changing?

Answer 16

no generally specific tax

Question 17

Graph for ad valorem tax

Answer 17

Question 18

Graph for per-unit tax

Answer 18

Question 19

How do lump sum taxes affect the supply curve?

Answer 19

no effect

Question 20

What is assumed when apply tariffs?

Answer 20

constant price of imported good

Question 21

taxes —- the prices of goods and services

Answer 21

increase

Question 22

taxes —- the output of goods and services

Answer 22

reduce

Question 23

the size of the market for the good or service is —-

Answer 23

diminished

Question 24

consumer surplus is —- as consumers pay a higher price

Answer 24

reduced

Question 25

producer surplus is ---- as producers after-tax revenue is ----

Answer 25

reduced reduced

Question 26

government enjoys ---- tax revenue

Answer 26

greater

Question 27

tax incidence

Answer 27

relative measurement of the respective burden of a per-unit tax on the consumers and producers

Question 28

What does deadweight welfare loss represent?

Answer 28

existence of inefficiency in the market

Question 29

Where is consumer surplus found at equilibrium?

Answer 29

A + B + C + D

Question 30

Where is producer surplus found at equilibrium?

Answer 30

E + F + G + H

Question 31

Where is community surplus found at equilibrium?

Answer 31

A + B + C + D + E + F + G + H

Question 32

What is not found at equilibrium?

Answer 32

tax revenue or deadweight welfare loss

Question 33

How do you see per-unit tax on graph?

Answer 33

distance between two supply curves P1 - P2

Question 34

Total tax revenue

Answer 34

(P1 - P2) x Q1

Question 35

Where is tax revenue found on a graph?

Answer 35

B + C + E + F

Question 36

Where is the tax that comes from consumers found on a graph?

Answer 36

B + C

Question 37

Where is the tax that comes from producers found on a graph?

Answer 37

E + F

Question 38

Where is consumer surplus after tax found on a graph?

Answer 38

A

Question 39

Where is producer surplus found on a graph?

Answer 39

H

Question 40

Where is deadweight welfare loss found on a graph?

Answer 40

D + G

Question 41

deadweight welfare loss

Answer 41

value lost to society by the introduction of tax value lost rather than transferred to another agent within society cost of inefficiency in market

Question 42

Where is the consumer's share of deadweight welfare loss found on a graph?

Answer 42

D

Question 43

Where is the producers's share of deadweight welfare loss found on a graph?

Answer 43

G

Question 44

Burden when PED greater than PES

Answer 44

greater on producers than consumers

Question 45

Burden when PED less than PES

Answer 45

greater on consumers than producers

Question 46

Burden when PED equals PES

Answer 46

burden equally shared between consumers

Question 47

Effect of inelastic PED on tax revenue, deadweight welfare loss and efficiency

Answer 47

greater tax revenue relatively small DWL less inefficiency caused

Question 48

Effect of elastic PED on tax revenue, DWL and efficiency

Answer 48

lower tax revenue relatively large DWL more inefficiency caused

Question 49

burden when PED = undefined (perfectly elastic)

Answer 49

producers have entire burden

Question 50

burden when PED = 0 (perfectly inelastic)

Answer 50

consumers have entire burden

Question 51

burden when PES = undefined (perfectly elastic)

Answer 51

consumers have entire burden

Question 52

burden when PES = 0 (perfectly inelastic)

Answer 52

producers have entire burden

Question 53

What is the effect of per-unit taxation on demand curve?

Answer 53

no effect

Question 54

What is the supply equation given specific tax, t?

Answer 54

Qs = m(P-t) + A

Question 55

What is the supply equation given ad valorem tax of x percent (given as decimal)?

Answer 55

Qs = m(P-Px) + A