Question

20-

The imposition of a tax on a good enables the government to

raise the price received by sellers of the goods that have been taxed.

lower the price paid by buyers for the goods that have been taxed.

create a more efficient economic system.

take part of consumer and producer surplus as tax revenue when the good is purchased. 21- The demand for gasoline is inelastic and the supply of gasoline is elastic. Therefore, sellers bear most of the incidence of a tax on gasoline. buyers bear most of the incidence of a tax on gasoline. the government bears most of the incidence of a tax on gasoline. the incidence of a tax on gasoline depends if the tax is imposed on sellers or on buyers. 22- The percentage of an additional dollar that is paid in tax is called the average tax rate. the marginal tax rate. a proportional tax. a progressive tax. 23- If the average tax rate increases as income increases, the tax is progressive. proportional. regressive. an excise tax. 24- If there is a payroll tax levied on employers, the labor demand curve ________ and the labor supply curve ________. shifts rightward; does not shift shifts leftward; does not shift does not shift; shifts rightward does not shift; shifts leftward 25- The assertion that people with the same ability to pay taxes should pay the same amount in taxes best represents the idea of horizontal equity. vertical equity. the benefits principle of tax fairness. fairness principle of taxation. 26- If you can prevent someone from consuming a good, that good is called rival. nonrival. excludable. nonexcludable. 27- To hunters, deer in the woods are an example of a public good. private good. common resource. natural monopoly.

Answer 1

20.

When the government impose tax on a good, then the burden of tax falls on both consumers and producers but the more burdens falls on the inelastic part of the demand and supply.

It means due to tax, less quantity is traded. Hence both producer and consumer surpluses decreases.

It means the imposition of a tax on a good enables the government to take part of consumer and producer surplus as tax revenue when the good is purchased.

Hence option fourth is the correct answer.

21.

Since the demand for gasoline is inelastic, so the burden of tax falls more on the buyer and less on sellers because the supply curve is elastic.

Therefore the demand for gasoline is inelastic and the supply of gasoline is elastic. Therefore, buyers bear most of the incidence of a tax on gasoline.

Hence option second is the correct answer.

22.

The percentage of an additional dollar that is paid in tax is called the marginal tax rate because it is additional tax paid due to an additional increase in the income.

Hence option second is the correct answer.

23.

When the average tax rate increases as income increases, the tax is called progressive tax because it reduces income inequality because tax burden increases with the increase in the income.

Hence option fourth is the correct answer.