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Impact, shifting and incidence of a tax

Total questions: 28

Worksheet time: 35mins

Name
Class
Date
1.

Ralph buys a computer for $675. The sales tax rate is 6%. How much did Ralph pay for the computer?

a)

700

b)

715.50

c)

681

d)

815

2.
Find the tip amount on a $20 lunch if you leave a 20% tip.
a)
$ .40
b)
$ 2.00
c)
$ 4
d)
$ 24
3.
Tickets to Disney World are $100. The price is going to increase on January 1. What is the percent of change if the cost increases to a $120?
a)
25%
b)
18%
c)
20%
d)
50%
4.

The shirt that you bought was $20. The sales tax was 15%, what was the final price?

a)

$20

b)

$22

c)

$23

d)

$17

5.

The TV you bought was $900 and the sales tax was 10%, what was the total cost of the TV.

a)

$900

b)

$990

c)

$810

d)

$1035

6.

Which of the following correctly identifies the areas of consumer surplus (CS), producer surplus (PS), tax revenue and deadweight loss (DWL) in this market after the tax?

a)

CS = R; PS = UV

DWL = T; tax = S

b)

CS = R; PS = V

DWL = 0; tax = SU

c)

CS = RST; PS = UWV

DWL = 0; tax = 0

d)

CS = RST; PS = UWV

DWL = TW; tax = 0

e)

CS = R; PS = V

DWL = TW; tax = SU

7.

A $1per unit tax has been imposed on sellers of this good


What is the total amount of tax revenue and how much of that is the producer's tax burden?

a)

Tax revenue is $1; producer's tax burden is $0

b)

Tax revenue is $3; producer's tax burden is $0

c)

Tax revenue is $1; producer's tax burden is $1

d)

Tax revenue is $3; producer's tax burden is $3

e)

Tax revenue is $3; producer's tax burden is $1.50

8.

What is the dollar amount of the tax, and who has the tax been imposed on?

a)

$2.50 on buyers

b)

$5 tax on sellers

c)

$2.50 on both buyers and sellers

d)

$5 tax on buyers

e)

$2.50 on sellers

9.

Which of the letters in this graph represents the surplus that is lost to sellers who are no longer able to participate in this market?

a)

R

b)

T

c)

S

d)

U

e)

W

10.

The person who will ultimately shoulder the burden of the tax

a)

Incidence of a Tax

b)

Personal Exemption

c)

Appropriations Bill

d)

Deductions

11.

Incidence of a tax refers to the--------------burden of tax:

a)

Initial

b)

Ultimate

c)

Intermediate

d)

None

12.

In the case of direct tax, impact and incidence are on:

a)

Different person

b)

Same person

c)

Sellers

d)

None of these

13.

Which tax cannot be shifted to others?

a)

Excise duty

b)

Sales tax

c)

Entertainment tax

d)

Wealth tax

14.

When Ed=∞or Es=0, the whole incidence is on

a)

Buyers

b)

Sellers

c)

Govt.

d)

none of these

15.

When Es=∞or Ed=0, the whole incidence is on

a)

Buyers

b)

Sellers

c)

Govt.

d)

none of these

16.

When Ed=Es, the burden is divided between

a)

Buyers

b)

Sellers

c)

both buyers and sellers

d)

Government

17.

When Es> Ed, more incidence is on

a)

Buyers

b)

Sellers

c)

Government

d)

none of these

18.

When Ed>Es, more incidence is on

a)

Buyers

b)

Sellers

c)

Government

d)

none of these

19.

What is a tax?

a)

Optional payment to the government

b)

Mandatory payment to a local, state, or national government

c)

Extra money you give a store

d)

None of the above

20.

What is the principle that says people who benefit directly from public goods should pay for them in proportion to the amount of benefits received?

a)

Ability-to-Pay Principle

b)

Benefits-Received Principle

c)

Incidence of a tax

d)

Tax incentive

21.

Which of the following is a tax based on the value of an individual’s or business’s assets?

a)

Sales tax

b)

Corporate income tax

c)

Individual income tax

d)

Property tax

22.

What tax structure takes the same percentage of income from all taxpayers?

a)

Proportional tax

b)

Progressive tax

c)

Regressive tax

23.

What tax structure places a higher percentage rate of taxation on high-income earners than on low-income earners?

a)

Proportional tax

b)

Progressive tax

c)

Regressive tax

24.

__________ is a term used to refer to backward shifting of taxes in case of durable items like houses, cars etc. that are subject to periodic taxes.

a)

Incidence of tax

b)

Tax capitalization

c)

Impact of tax

d)

Effective incidence of a tax

25.

Dalton considers incidence as the _________ of tax on the person who ultimately pays it.

a)

indirect money burden

b)

direct money burden

c)

formal tax incidence

d)

effective tax incidence

26.

According to Mrs. Hicks, the exact reaction of tax payers or the economic repercussions can only be understood through the concept of _________.

a)

formal incidence

b)

effective incidence

c)

direct money burden

d)

indirect money burden

27.

________ is one when the pattern of distribution changes due to the imposition of a new tax or by changing the rates of existing taxation, keeping public expenditure and other budgetary phenomena unchanged.

a)

Differential tax incidence

b)

Specific tax incidence

c)

formal tax incidence

d)

effective tax incidence

28.

The concept of ___________ is much appreciated by modern economists, as it relates to a change in the tax system.

a)

specific tax incidence

b)

differential incidence

c)

formal tax incidence

d)

effective tax incidence

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