When a tax distorts incentives to buyers and sellers so that fewer goods are produced and sold than otherwise the tax has ?

Related Mcqs:

1. The appropriate tax rate to consider gauging how much the tax system distorts incentives and decision making is the ?

   A. Proportional tax rate
   B. average tax rate
   C. marginal tax rate
   D. vertical tax rate
   E. horizontal tax rate

2. Micheal Roemer’s three-sector model shows that growth in the booming export sector I- reduces the price of foreign exchange II- retards other sectors’ growth by reducing incentives to export other commodities III- reduces incentives to replace domestic goods for imports IV- raises factor and input prices for non-booming sectors ?

   A. I and III only
   B. II and III only
   C. I, II and III only
   D. I, II , III only IV

3. Refer to Exhibit 4. If a tax is placed on the product in this market tax revenue paid by the sellers is the area ?

   A. C + F
   B. A
   C. B
   D. C

4. _______ states that as real GNP per capita rises, people demand relatively more social goods and relatively fewer private goods?

   A. incomes policy
   B. Moral hazard
   C. Wagner’s law
   D. Fiscal policy

5. Refer to Exhibit 4. If a tax is placed on the product in this market tax revenue paid by the buyers is the area ?

   A. B + C + E + F
   B. B
   C. B + C
   D. A

6. When supply exceeds demand, sellers must lower prices to stimulate sales, when demand exceeds supply, prices increase as buyers compete to buy goods. What this theory is called in economics?

   A. Cost push theory
   B. Supply and Demand theory
   C. Fundamental theory
   D. Ricardo’s theory

7. The property tax wealth tax inheritance tax and income taxes such as persona and corporate taxes are ?

   A. indirect taxes
   B. direct taxes
   C. inelastic
   D. value-added tax

8. Imagine there is no tax on income up to Rs 1000 after that there is a tax of 505 what is the average tax rate on an income of Rs 20,000 ?

   A. Rs 50000
   B. 20%
   C. 25%
   D. Rs 10000

9. In general, if a benevolent social planner wanted to maximize the total benefits received by buyers and sellers in a market, the planner should?

   A. choose a price below the market equilibrium price
   B. allow the market to seek equilibrium on its own.
   C. Choose any price the planner wants because the losses to the sellers (buyers) from any change in price are exactly offset by the gains to the buyers (sellers).
   D. choose a price above the market equilibrium price

10. Suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. What would we expect to happen to the equilibrium price and quantity in the market for wheat today ?

    A. The impact on both price and quantity is ambiguous
    B. Price will decrease, quantity is ambiguous.
    C. price will increase, quantity will decrease
    D. price will increase, quantity is ambiguous.
    E. Price will increase, quantity will increase