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public_ps6_sp09 - 1 NAME PAM 204 Problem Set#6 Circle your...

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NAME__________________________ PAM 204- Problem Set #6 Circle your answers to the multiple choice questions. Each multiple choice question is worth 1 point. Answer problems #5-9 on pages 2-6. PS #6 is out of 25 points. 1. Suppose the government taxes married couples on a family basis. Consider the following tax schedule: Single Married Taxable income Marginal tax rate Taxable income Marginal tax rate $0- $10,000 20% $0- $20,000 20% >$10,000 50% >$20,000 50% This tax system violates the principle of _____ . A) across-marriage horizontal equity B) across-family horizontal equity C) progressivity 2. Suppose that the labor supply curve is relatively elastic (but not perfectly elastic) and that the labor demand curve is relatively inelastic (but not perfectly inelastic). A payroll tax that is fixed at $X per unit of labor is levied on employers. The revenue is not used to benefit the workers. The wage workers receive will _____ . Most of the burden of the payroll tax is borne by ____ . A) decrease, workers B) decrease, firms C) increase, workers D) increase, firms 3. Suppose the demand curve for good X is relatively inelastic (but not perfectly inelastic) and the supply curve for good X is relatively elastic (but not perfectly elastic). A per-unit tax on good X is levied on consumers. The price that sellers receive in the marketplace will _____ . Most of the tax burden is borne by _____ .
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