2nd attempt Public Sector Economics Quiz

What is the advantage of commodity taxes?

• Reduces government revenue

• Provides public information

• Increases consumer surplus

• Distorts consumer choice

What is the classification based on the rate at which the next currency unit is taxed?

• Marginal tax rate

• Average tax rate

• Progressive tax rate

• Proportional tax rate

What is the main disadvantage of commodity taxes?

• Reduces government revenue

• Provides public information

• Distorts consumer choice

• Increases consumer surplus

What is the rule that states the more inelastic party bears a larger share of the tax burden?

• Inverse Elasticity Rule

• Horizontal equity

• Ramsey Rule

• Vertical equity

What is the measure of the value of having another dollar in the public sector vs the private sector?

• Average tax rate

• Value of government spending

• Marginal tax rate

• Salience of taxes

What is the implication of the Inverse Elasticity Rule for taxing goods?

• Tax elastic goods more

• Tax inelastic goods more

• Tax all goods equally

• Do not impose taxes

What is the optimal taxation rule that minimizes the deadweight loss?

• Broad base rule

• Inverse Elasticity Rule

• Counterbalancing rule

• Ramsey Rule

What is the measure of the extra deadweight loss from an infinitesimal increase in taxes?

• Incremental deadweight loss

• Total deadweight loss

• Average deadweight loss

• Marginal deadweight loss

What is the implication of the Ramsey Rule for taxing goods A and B?

• Do not impose taxes on A and B

• Tax both goods equally

• Tax on A should be lowered and tax on B raised

• Tax on A should be raised and tax on B lowered

What is the main implication of the findings by Chetty et al. (2009) regarding tax salience?

• People are unaware of tax rates

• People are fully aware of prices and taxes

• People find altered price tags weird

• People do not change behavior based on tax rates