1. When supply is elastic and demand is inelastic, tax incidence falls on the ___.
a) government
b) producer
c) consumer
2) If the demand for a product is inelastic but the supply is elastic, the ____ will bear the tax incidence.
a) producer
b) consumer
c) government
3. An example of a progressive tax would be
a) the Medicare payroll tax of 2.9% of income for everyone, regardless of how much they earn.
b) a Social Security tax rate of 5% on earned income below $100,000 and 0% on income earn above $100,000.
c) an income tax with a 10% tax rate on low income households and 20-30% tax rates on higher income households.
4. Which of the following example(s) describe a proportional tax?
a) Social Security tax rate of 6.2% on earned income below $117,000 and 0% on income earned above $117,000
b) Medicare payroll tax of 2.9% of income for everyone, regardless of how much they earn.
c) Income tax with a 10% tax rate on low income households and 20-30% tax rates on higher income households.
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