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WorksheetsTeam 10_Public economics
Total questions: 10
Worksheet time: 5mins
In monopoly markets, how do ad valorem and specific taxes differ?
No difference
Ad valorem is more efficient
Specific is more efficient
Neither affects output
A good tax system should ensure which combination of principles?
Simplicity, efficiency, equity, flexibility, transparency
Only efficiency
Maximum revenue
Minimal market intervention
When a tax increases in a monopoly market, what usually happens to price and output?
The price increases by the full amount of the tax, and output remains unchanged.
The price increases by less than the tax, and output decreases.
The price decreases, and output increases.
The price remains the same, and output slightly decreases.
When one side (buyers or sellers) has a high elasticity, it means that side:
Is more vulnerable to taxation
Is less affected by taxation
Bears the entire tax burden
Is not affected by taxes at all
In a competitive market, what determines how the tax burden is shared?
Number of firms
Elasticities of demand and supply
Nominal tax rate
Consumer income
Compared with a specific tax, an ad valorem tax with the same revenue tends to:
Reduce output more
Reduce output less
Have no effect on output
Be less efficient
Which combination best describes the income and substitution effects of a tax on consumption?
Both effects encourage more consumption
Both effects decrease consumption of taxed goods
Income effect increases, substitution effect decreases consumption
Income effect neutralizes substitution effect
Deadweight loss from taxation will increase when:
The tax rate decreases
Demand becomes more elastic
Demand becomes less elastic
The good is perfectly inelastic
The efficiency loss caused by wage taxation depends on:
Government expenditure
Elasticity of labor supply
Wage level only
Time preference
According to the theory, the optimal tax structure is one that:
Has the highest tax rate
Is highly progressive
Minimizes efficiency loss and distortions
Applies equally to all incomes
