exam1 - Department of Economics University of California,...

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Department of Economics University of California, Davis ECONOMICS 131 Spring 2008 L. Jay Helms Midterm Examination Please answer all four (4) questions. 100 points are possible. 1. Fairness in Taxation (15 points total) a. (5) Define horizontal equity , and give an example of a tax (real or hypothetical) which might be seen to violate it. Explain. b. (5) Define vertical equity , and give an example of a tax (real or hypothetical) which might be seen to violate it. Explain. c. (5) Define the benefit principle (also called the benefits-received principle ), and give an example of a tax (real or hypothetical) which might be seen to violate it. Explain. 2. Partial Equilibrium Incidence and Excess Burden (30 points total) Consider the market for bagels, which are produced at a constant cost of 50¢ per bagel. The government imposes an excise tax of 10¢ per bagel, with the tax to be paid by the seller . The demand curve is linear and downward-sloping.
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This note was uploaded on 10/15/2009 for the course ECON 131 taught by Professor Staff during the Spring '08 term at UC Davis.

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exam1 - Department of Economics University of California,...

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