Tax Incidence Quiz

What is tax incidence?

• Allocation of tax revenue between government and taxpayers

• Distribution of tax burden between buyers and sellers

• The percentage of tax paid by high-income individuals

• The process of calculating tax deductions

Who bears the burden of a specific tax?

• Government

• Foreign investors

• Consumers and/or producers

• Tax collectors

What factors determine the incidence of a specific tax?

• Geographical location, population size, and income distribution.

• Tax rate and tax base, government spending, and economic growth.

• Elasticity of demand and supply, ability to shift tax burden, and relative market power of buyers and sellers.

• Political stability, inflation rate, and tax compliance.

What is the difference between statutory incidence and economic incidence?

• Statutory incidence refers to the legal responsibility for paying a tax, while economic incidence refers to the distribution of tax revenue among different government agencies.

• Statutory incidence refers to the economic burden of a tax, while economic incidence refers to the legal responsibility for paying a tax.

• Statutory incidence refers to the legal responsibility for paying a tax, while economic incidence refers to the legal consequences of not paying a tax.

• Statutory incidence refers to the legal responsibility for paying a tax, while economic incidence refers to the actual burden of the tax and who ultimately bears it.

How does the elasticity of demand affect the incidence of a specific tax?

• The elasticity of demand has no effect on the incidence of a specific tax.

• The elasticity of demand affects the incidence of a specific tax by determining how much of the tax burden is passed on to consumers or producers.

• The elasticity of demand affects the incidence of a specific tax by increasing government revenue.

• The elasticity of demand affects the incidence of a specific tax by reducing the overall tax burden.

What is the difference between progressive, regressive, and proportional taxes?

• Progressive taxes apply the same tax rate to all income levels. Regressive taxes take a larger percentage of income from high-income earners compared to low-income earners. Proportional taxes are based on the taxpayer's ability to pay, where the tax rate increases as income increases.

• Progressive taxes are based on the taxpayer's ability to pay, where the tax rate increases as income increases. Regressive taxes take a larger percentage of income from low-income earners compared to high-income earners. Proportional taxes apply the same tax rate to all income levels.

• Progressive taxes take a larger percentage of income from low-income earners compared to high-income earners. Regressive taxes are based on the taxpayer's ability to pay, where the tax rate increases as income increases. Proportional taxes apply different tax rates to different income levels.

• Progressive taxes take a larger percentage of income from high-income earners compared to low-income earners. Regressive taxes apply different tax rates to different income levels. Proportional taxes are based on the taxpayer's ability to pay, where the tax rate decreases as income increases.

How does the incidence of a specific tax change when the supply is more elastic than demand?

• The incidence of the tax is evenly distributed between suppliers and consumers.

• The incidence of the tax is not affected by the elasticity of supply and demand.

• The incidence of the tax falls more heavily on the consumers.

• The incidence of the tax falls more heavily on the suppliers.

What is the concept of tax shifting?

• The elimination of taxes altogether.

• The redistribution of tax revenue to different government programs.

• The increase in tax rates for all individuals and businesses.

• The transfer of the burden of a tax from one party to another.

How does the incidence of a specific tax change when the demand is more elastic than supply?

• The incidence of the tax falls more heavily on the consumers.

• The incidence of the tax falls more heavily on the producers.

• The incidence of the tax is not affected by the elasticity of demand and supply.

• The incidence of the tax is evenly distributed between producers and consumers.

What are some real-world examples of specific taxes and their incidence?

• Sales tax, income tax, property tax, and excise tax

• Sin tax, carbon tax, toll tax, and inheritance tax

• Estate tax, gift tax, luxury tax, and fuel tax

• Value-added tax, capital gains tax, payroll tax, and import tax