Problem 1: Suppose that the current market rate of interest is 10 percent. The market rent on a parcel of land is $6,000 per year. A 10-percent land tax is imposed. As a result of the tax, the price of the land parcel:
- falls from $60,000 to $30,000.
- increases from $30,000 to $60,000.
- falls 10 percent.
- falls 20 percent.
Problem 2: According to the Harberger model of the incidence of the corporate income tax, the tax:
- reduces the return to capital in the corporate sector of the economy only.
- reduces the return to capital in all uses.
- has no effect on the return to capital.
- increases the return to capital.
Problem 3: If corporations maximize profit, a corporate income tax:
- has no affect on the profit-maximizing output in the short run.
- reduces the profit, maximizing output in the short run.
- increase the profit, maximizing output in the short run.
- increases the supply of corporate output in the short run.
Problem 4: Assuming that corporations maximize profits and investors seek to maximize the return to their investments, the long-run impact of a corporate income tax is to:
- reduce the incomes of corporate shareholders only.
- reduce the incomes of workers only.
- reduce the incomes of all investors.
- increase the price of both corporate and non-corporate goods.
Problem 5: Suppose that the current market rate of interest is 10 percent. The market rent on a parcel of land is $6,000 per year. A 10-percent land tax is imposed. As a result of the tax, the price of the land parcel:
- falls from $60,000 to $30,000.
- increases from $30,000 to $60,000.
- falls 10 percent.
- falls 20 percent.
Problem 6: According to the Harberger model of the incidence of the corporate income tax, the tax:
- reduces the return to capital in the corporate sector of the economy only.
- reduces the return to capital in all uses.
- has no effect on the return to capital.
- increases the return to capital.
Problem 7: If corporations maximize profit, a corporate income tax:
- has no affect on the profit-maximizing output in the short run.
- reduces the profit, maximizing output in the short run.
- increase the profit, maximizing output in the short run.
- increases the supply of corporate output in the short run.
Problem 8: Assuming that corporations maximize profits and investors seek to maximize the return to their investments, the long-run impact of a corporate income tax is to:
- reduce the incomes of corporate shareholders only.
- reduce the incomes of workers only.
- reduce the incomes of all investors.
- increase the price of both corporate and non-corporate goods.