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Effective tax rates for two taxpayers with the same nominal incomes.The tax elasticity of supply measures the:-2-2Response of employers to a change in the tax rate.Response of workers to a change in the tax rate.Change in the amount of taxes workers must pay when tax rates change.Response of workers to a change in prices.A mathematical summary of inequality based on the Lorenz curve is known as the:-2-2Okun coefficient.Gini coefficient.Income distribution share.Lorenz coefficient.Market failure exists whenever:-2-2The government intervenes in the market.Government intervention makes the situation worse.
The market generates a suboptimal outcome.Income distribution is unequal.With a flat tax:-2-2Vertical inequities cannot occur.The government's ability to change the mix of output is increased.Everyone pays the same amount of absolute tax.Decisions are based on economic considerations rather than tax incentives.Assume that the marginal tax rate is 10% for the first $10,000 of income, 20% for income between $10,000 and $40,000, and 30% for any income over $40,000. If Aaron has taxable income equal to $60,000 for 2007, what is his tax bill?-2-2$15,000$6,000$13,000$18,000If a greater portion of income is distributed to those in the highest income quintile, the:-2-2Line of equality sags below the Lorenz curve.Gini coefficient is less than zero.Lorenz curve sags below the diagonal line of absolute equality.Lorenz curve is a straight line.The taxation principle that says people with higher incomes should pay more in taxes than those with lower incomes is called:-2-2Horizontal equity.Vertical equity.A regressive tax system.A flat tax system.A tax elasticity of supply equal to zero would indicate:-2-2Employers would hire more workers if tax rates increased.Employers would not hire any workers if tax rates increased.Workers would not work at all if tax rates increased.
Workers would not cut back on the number of hours worked if tax rates increased.Suppose a taxpayer has an income of $100,000, a taxable income of $80,000, and taxes of $10,000. If the taxpayer talks of being taxed at a 10 percent rate, she is referring to the:-2-2Average tax rate.Nominal tax rate.Marginal tax rate.Effective tax rate.Flat tax critics:-2-2Point out that it would increase home values significantly.Point out that it would increase the government's ability to alter the mix of output.Believe it would make it easier for state and local governments to raise their own revenues.Believe it would create additional vertical and horizontal inequities.Government failure:-2-2Results when government intervention fails to improve market outcomes.Does not occur; only market failure occurs.Occurs whenever there is market failure.Occurs whenever the government intervenes in the market.If the tax elasticity of supply is 0.6 and tax rates increase by 10 percent, the quantity of labor supplied would:-2-2Increase by 6 percent.