taxation MCQs – Page 2

Practise focused taxation questions with marked answers for exam preparation and subject revision.

taxation Mcqs
21. Which of the following taxes can be supported by the benefits principle of taxation ?
comments icon0
A. All these answers can be supported by the benefits principle of taxation

B. property taxes used to pay for policies and the court system

C. Petrol taxes used to pay for roads

D. Progressive income taxes used to pay for national defense

22. Refer to Exhibit 4. Which of the following is true with regard to the burden of the tax in Exhibit 4 ?
comments icon0
A. The sellers pay a larger portion of the tax because supply is more inelastic than demand

B. The buyers pay a larger portion of the tax because demand is more inelastic than supply

C. The buyers pay a larger portion of the tax because demand is more elastic then supply

D. The sellers pay a larger portion of the tax because supply is more elastic than demand

23. A progressive tax system is one where ?
comments icon0

A. marginal tax rates are high.

B. higher income taxpayers pay more taxes than do lower income taxpayers.

C. marginal tax rates are low.

D. higher income taxpayers pay a greater percentage of their income in taxes than do lower income taxpayers.
24. Which of the following would likely cause the greatest deadweight loss ?
comments icon0
A. a tax on cruise line tickets

B. a tax on salt

C. a tax on petrol

D. a tax on cigarettes

25. Refer to Exhibit 4. If a tax is placed on the product in this market, producer surplus is the area?
comments icon0

A. A + B + C + D

B. A

C. A + B + E

D. D
26. Since the supply of undeveloped land is relatively inelastic a tax on undeveloped land would generate ?
comments icon0

A. a small deadweight loss and the burden of the tax would fall on the renter

B. a large deadweight loss and the burden of the tax would fall on the renter.

C. a large deadweight loss and the burden of the tax would fall on the landlora

D. a small deadweight loss and the burden of the tax would fall on the landlord
27. Refer to Exhibit 4. If a tax is placed on the product in this market tax revenue paid by the buyers is the area ?
comments icon0

A. B + C

B. B + C + E + F

C. A

D. B
28. When a tax on a good start small and is gradually increased tax revenue ?
comments icon0

A. will fall

B. will first fall and then rise

C. will first rise and then fall

D. will rise

29. A tax for which high income taxpayers pay a smaller fraction of their income than do low income taxpayers is known as ?
comments icon0
A. a regressive tax

B. a proportional tax

C. an equitable tax

D. a progressive tax

30. Refer to Exhibit 4. If a tax is placed on the product in this market tax revenue paid by the sellers is the area ?
comments icon0

A. C + F

B. B

C. A

D. C
31. The appropriate tax rate to consider judging the vertical equity of a tax system is the ?
comments icon0

A. proportional tax rate

B. marginal tax rate

C. average tax rate

D. horizontal tax rate

32. Which of the following is true with regard to a tax on labor income? Taxes on labor income tend to encourage ?
comments icon0

A. second earners to stay home.

B. the elderly to retire early.

C. all the things described in these answers.

D. the unscrupulous to enter the underground economy

E. workers to work fewer hours