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exam2c - Introduction to Microeconomics Exam 2 April 2010...

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Introduction to Microeconomics Exam 2 April 2010 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country. What is the marginal income tax rate for an individual who earns $40,000 during the year? a. 0% b. The marginal tax rate cannot be determined without knowing the entire tax schedule. c. 10% d. More than 10% ____ 2. Which of the following statements is correct? Figure 8-7 The vertical distance between points A and B represents a tax in the market. Demand Supply B A 5 10 15 20 25 30 35 40 45 50 55 60 Quantity 2 4 6 8 10 12 14 16 18 20 22 24 Price ____ 3. Refer to Figure 8-7 . Which of the following statements summarizes the incidence of the tax? ____ 4. Once tradable pollution permits have been allocated to firms,
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____ 5. Tim earns income of $60,000 per year and pays $21,000 per year in taxes. Tim paid 20 percent in taxes on the first $30,000 he earned. What was the marginal tax rate on the second $30,000 he earned? a. 50 percent b. 30 percent c. 70 percent d. 20 percent ____ 6. An optimal tax on pollution would result in which of the following? ____
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