Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506893
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter ST2, Problem 6CQ
To determine
The difference social security payroll tax makes between the employee and the employer.
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Check out a sample textbook solutionStudents have asked these similar questions
Consider a perfectly competitive labor market with a very inelastic supply of labor. If a payroll tax is implemented, who would bear a larger portion of the tax burden?
a.Mostly by the employer.
b.Mostly by the employee.
c.Split fairly evenly between the employer and the employee.
If labor supply is perfectly inelastic, the imposing a payroll tax that will be split between employers and employees will
a) reduce employment.
b) leave employment levels unchanged.
c) cause the tax burden to fall exclusively on firms.
d) cause the tax burden to fall exclusively on workers.
Which one is CORRECT about the effects of tax on welfare as compared to without tax?
A.
Consumer surplus will rise
B.
Producer surplus will rise
C.
Tax revenue will rise
D.
Total surplus will rise
E.
All of the above
The effect of tax on deadweight loss becomes smaller when:
A.
demand is inelastic
B.
demand is elastic
C.
supply is inelastic
D.
supply is elastic
E.
A and C
F.
B and D
Which one is CORRECT about the marginal and average costs?
A.
Marginal cost crosses both average variable cost and average total cost at their minimum points.
B.
Average fixed cost increases continuously as the level of output increases.
C.
Whenever marginal cost is greater than average total cost, average total cost is rising.
D.
All of the above
Which of the following is an example of implicit costs?
A.
payments made by the firm to others
B.
opportunity cost of resources owned…
Chapter ST2 Solutions
Microeconomics: Private and Public Choice (MindTap Course List)
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Similar questions
- Suppose you earned $60,000 per year and pay taxes based on marginal tax rates. The first tax bracket which taxes at 10% ranges from zero dollars to $30,000. The second tax bracket which tax at 25% ranges from 30,001 to $120,000. How much will you pay in total taxes?arrow_forwardIn which case is the total amount of a payroll tax paid by employees through lower wages? Group of answer choices When the labor supply curve is horizontal. When the labor supply curve is vertical.. When the labor demand curve is vertical. When the labor supply curve is downward sloping at a 45-degree angle. When unemployment is widespread and the wage is above its market clearing level, a cut in employer payroll tax will Group of answer choices drive up wages but have little to no effect on employment and unemployment. increase employment, reduce unemployment, and have little effect on wages. be largely ineffective. benefit employers and have no effect on workers.arrow_forwardIn the United States, labor supply tends to be inelastic relative to labor demand, and according to law, payroll taxes are essentially assessed evenly between workers and firms. Given the above situation, are workers or firms more likely to bear the additional burden of an increased payroll tax in the United States? Could this burden be shifted to the firms by assessing the increase in payroll taxes on just firms rather than having firms and workers continue to be assessed payroll taxes equally?arrow_forward
- Many economists believe that a more effective way to supplement the income of the poor is through a negative income tax. Under this scheme, everyone reports his or her income to the government; individuals and families earning a higher income will pay a tax based on that income, while low-income individuals and families receive a subsidy, or negative tax. Assume that the only qualification required to receive a tax credit is low income. Suppose the government uses the following equation to compute a family’s tax liability: Taxes Owed = (1/4 of Income)−$6,000 For each of the incomes listed in the following table, determine the tax liability for a family with that income level. (Note: If a family receives a subsidy because its income is too low, be sure to indicate the tax liability as negative.) Income Tax Liability (Dollars per year) (Dollars per year) 0 12,000 24,000 60,000 True or False: Any family with an annual income more than…arrow_forwardExplain all right as well as wrong options In 1986 Congress drastically cut the marginal tax rate on upper income levels from 50% to 28%. Empirical evidence analyzing the labor supply effects of the tax cut found that women in the high income tax bracket Select one: A. reduced their labor force participation and hours worked significantly because of a dominant income effect. B. increased both labor force participation and hours of work significantly. C. experienced offsetting substitution and income effects. D. did not respond in any significant way to the tax cut, as their high level of income ensured that they were already content with their labor supply choices.arrow_forwardFUTA is a federal tax that is paid by employers for each employee to provide _____ compensation to workers who have lost their jobs. a. Medicare b. unemployment c. self employment d. social securityarrow_forward
- What do you think would happen if there were no taxes and you could spend all your money on capital and employee wages?arrow_forwardWhen the income tax was first proposed in 1894, it was ruled unconstitutional? True or falsearrow_forwardWhat is the value of the producer burden of the tax in this market? $90 $180 $360 $540 $720 14. If Country R has less income inequality than Country T, which of the following must be true? Country R will have greater wealth overall. Country T will have greater wealth overall. Country R will have more people in poverty than Country T. Country R will have a higher Gini coefficient than Country T. Country R will have a lower Gini coefficient than Country T. .arrow_forward
- Match the term with the definition:[?] is the rate you pay on the last dollars you earned A. Average tax rate[?] is the overall rate you pay on your entire income B. Marginal tax ratearrow_forwardEconomists disagree on whether labor taxes cause small or large deadweight losses. This disagreement arises primarily because economists hold different views about the size of labor taxes. the importance of labor taxes imposed by the federal government relative to the importance of labor taxes imposed by the various states. the elasticity of labor demand. the elasticity of labor supply.arrow_forwardAccording to the textbook, which of the following statements is (are) correct? (x) Taxes on specific goods such as cigarettes, gasoline and alcoholic beverages are called excise taxes (y) The government taxes corporate income on the basis of the number of employees. (z) The payroll tax differs from the individual income tax because all of the payroll tax is paid by the employer and all of the income tax is paid by the employee. (x), (y) and (z) (x) and (y) only (x) and (z) only (y) and (z) only (x) onlyarrow_forward
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