1.The main difference between sales and excise taxes is that:??? a) sales taxes

Question

1.The main difference between sales and excise taxes is that:???
a) sales taxes apply to a wide range of products, while excise taxes apply only to a select group of products.
b) excise taxes are consumption taxes, while sales taxes are not.
c)sales taxes are consumption taxes, while excise taxes are not.
d) excise taxes apply to a wide range of products, while sales taxes apply only to a select list of products.


2. Assume that in year 1 you pay an average tax rate of 20 percent on a taxable income of $20,000. In year 2, you pay an average tax rate of 25 percent on a taxable income of $30,000. Assuming no change in tax rates, the marginal tax rate on your additional $10,000 of income is:
12 percent.
5 percent.
35 percent.
42 percent.


3. If the demand for a product is perfectly elastic and supply is upsloping, a $1 excise tax per unit on suppliers will:
not raise price at all.
lower price by $1.
raise price by more than $1.
raise price by $1.

Explanation / Answer

1)
c)sales taxes are consumption taxes, while excise taxes are not.
2)
c)35 percent
3)
c)raise price by more than $1.

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