罗森财政学第七版（英文版）Chap013

罗森财政学第七版（英文版）Chap013
CHAPTER 13 - Taxation and Efficiency
Multiple-Choice Questions
1. An income effect
a) is measured as the change in prices over time.
b) is not possible when people are unemployed.
c) requires interest rates to remain constant.
d) is the change in the quantity demand, due to the fact that real income changes
when prices change.
e) is none of the above.
2. Equivalent variation means
a) finding an equivalent change in income that puts a person on the same utility as a
change in price would.
b) finding equal tax rates that insure quantity demanded does not change.
c) equalizing excess burden across all markets.
d) moving the same distance in either direction from a starting point on an
indifference curve.
e) price variations that ensure quantity demanded does not change.
3. The compensated demand curve
a) shows how the quantity demanded changes when the price changes.
b) shows how income is compensated, so that the individual’s commodity bundle
stays on the same indifference curve.
c) is sometimes referred to as the Hicksian demand curve.
d) is all of the above.
e) is none of the above.
4. The slope of the production possibilities curve is the
a) marginal rate of substitution.
b) contract curve.
c) offer curve.
d) Engel curve.
e) marginal rate of transformation.
5. Lump sum taxes
a) create no excess burden.
b) are not as widely used as other forms of taxation.
c) generally lack a sense of equity.
d) are all of the above.
e) are none of the above.
6. The marginal rate of substitution is
a) the slope of the utility curve.
b) the slope of the contract curve.
c) the slope of the utility possibilities curve.
d) none of the above.
7. Points on the same utility curve are
a) points where the person is indifferent between bundles on the line.
b) points where utility is maximized.
c) never possible.
d) known as “points of light.”
e) all of the above.
8. In the double-dividend hypothesis, if the proceeds from a Pigouvian tax are used to
________ income tax rates, then efficiency _________ in both
markets.
a) increase; increases
b) reduce; reduces
c) increase; reduces
d) reduce; increases
e) none of the above
9. A tax that causes the price that producers receive for a commodity to deviate from the
buyer’s price is
a) a unit tax.
b) a compensated tax.
c) an income tax.
d) a price-distorting tax.
10. Which of the following would be an example of a lump-sum tax?
a) a compensated tax
b) a retail sales tax
c) a head tax
d) an admission fee
11. Which of the following is a unit excise tax?
a) a tax of 15%
b) an admissions fee of $2.00 on each ticket purchased
c) an ad valorem tax of $3.00
d) an income tax of $3.00
e) none of the above
12. The economic incidence of a unit tax is
a) generally borne by the buyers.
b) generally borne by sellers.
c) generally borne by the government.
d) independent of the statutory incidence for the tax.
e) none of the above
13. Excess burden is largest with
a) lump-sum taxes.
b) unit taxes.
c) no taxes.
d) all of the above.
14. When a demand curve is vertical, the elasticity of demand is equal to
a) 0.
b) 1.
c) .
d) -1.
15. A tax wedge causes
a) consumer prices to equal producer prices.
b) producer prices to rise above consumer prices.
c) consumer prices to separate from producer prices.
d) all prices to fall.
e) none of the above.
Discussion Questions
1. Refer to Figure 13.5 in your textbook. Suppose that the demand curve for barley can be
characterized by the equation X d = 26 –P/2. Suppose further that price was $10.00 and a $4.00 tax is imposed on the market.
a) What is the amount of tax revenue generated by the tax?
b) How much excess burden is generated by the tax?
2. Refer to Figure 1
3.7 in your textbook. If the supply curve for labor can be written as L =
w/2 –3/2 and the initial wage was $10, how much excess
burden is created if there is a tax on wages of $2?
3. Suppose the inverse demand curve for good A is given by the equation P A = 10 – Q A/10,
and the supply curve is perfectly elastic (horizontal) at $1. Good A is presently taxed at $2 per unit. Good B (which is independent of good A) has an inverse demand curve, P B = 5 –Q B/20, and is also perfectly elastic at $1. Good B is untaxed.
a) How much tax revenue is collected and what is the excess burden of the $2 tax on
A?
b) How much revenue is collected if the tax on good A is reduced to $1 per unit and
good B is taxed at $1 per unit?
c) What is the total excess burden of taxing both goods at $1 per unit?
d) Which tax system is preferable from the point of view of economic efficiency?
4. Suppose that demand is perfectly inelastic. Supply is normal and upward sloping. What
is the economic incidence of a unit tax placed on suppliers?
5. Refer to Figure 13.8 in your textbook. If VMP mkt can be characterized by the equation
VMP mkt= 50 –2H mkt, where H is the number of hours worked, and VMP home can be characterized by the equation VMP home = 45 –3H home, where H is the number of hours worked, what is H* if there are a total of 40 hours to be worked between work and home? True/False/Uncertain Questions
1. When a single tax is imposed, the excess burden is proportional to the compensated
elasticity of demand and to the square of the tax rate.
2. A lump sum tax can create an excess burden.
3. The logic of the double-dividend hypothesis may not hold because the Pigouvian tax
exacerbates pre-existing distortions in the labor market.
4. Taxing in labor markets creates more excess burden than taxing in commodity markets.
5. The differential taxation of inputs does not create an excess burden.
6. Lump sum taxes do not distort behavior.
7. Taxes that create an excess burden are bad.
8. Excess burden calculations typically assume no other distortions.
9. Unit taxes vary along with the price of the taxed commodity.
10. Taxes impose an excess burden.
Essay Questions
1. Suppose you had to design an economic system for a country that had never existed
before, like one of the former Soviet Union countries. What criteria would you consider to minimize the excess burden of the system of taxation?
2. Equivalent variation is a method employed to measure excess burden. Comment on why
a method such as compensating variation would not be appropriate for this analysis.
3. Is it possible to design a tax that does all of the following:
i) leaves behavior unchanged
so that the quantity demanded of goods and services does not change, ii) creates no excess burden, iii) is not regressive, and iv) is welfare enhancing?
Answers to CHAPTER 13 - Taxation and Efficiency
Answers to Multiple-Choice Questions
1. a
2. a
3. d
4. e
5. d
6. a
7. a
8. d
9. d
10. c
11. b
12. d
13. b
14. a
15. c
Answers to Discussion Questions
1. a) Tax revenue generated is (4)(19) = 76.
b) Excess burden is (1/2)(4)(2) = 4.
2. Excess burden is the area of the triangle idh, which is (1/2)(2)(1) = 1.
3. a) Tax revenue = (2)(70) =140. Excess burden = (1/2)(2)(20) = 20.
b) Total tax revenue = (1)(80) + (1)(60) = 140.
c) Total excess burden = (1/2)(20)(1) + (1/2)(10)(1) = 15.
d) Both systems raise the same amount of tax revenue, 140, but the second system
does it with less excess burden, 15 < 20. Therefore, the second system would be
more efficient.
4. The economic incidence of the tax falls entirely on the consumers.
5. Setting the two equations equal to each other gives 50 –2H mkt = 45 –3H home and,
keeping in mind the total time constraint, that H mkt + H home = 40 yields that H home * = 25 and H mkt* = 15.
Answers to True/False/Uncertain Questions
1. T
2. F
3. T
4. U
5. F
6. T
7. F
8. T
9. F
10. U
Answers to Essay Questions
1. Reducing excess burden would be critical, but there has to be a great deal of care
involved in ensuring that the tax system is fair. This would be very important for a new country that has no institutional history to draw upon.
2. Compensating variation measures the change in income that would be required to return a
person to his original utility curve after a commodity tax/subsidy had moved him from it.
Equivalent variation measures the amount of income change that would be necessary to move a person to the same level of
utility that a commodity tax/subsidy moved him to. 3. No. Currently, it would be difficult to design a tax system that can do all of these things.。