(1)Unlimited liability exists when A) a firm dissolves when the owner dies. B) t

Question

(1)Unlimited liability exists when

A) a firm dissolves when the owner dies. B) the profits of the firm are taxed once. C) the personal assets of the owner of a firm can be seized to pay off the firm's debts. D) a corporation exists.

(2)The U.S. Social Security tax is an example of a:

A) regressive tax. B) premium tax. C) progressive tax. D) proportional tax.

(3)The marginal income tax rate applies to:

A) all income earned by a family. B) the income received by people above the national average. C) the income of the highest income U.S. taxpayers. D) the income in the highest tax bracket reached

(4)A shortage exists:

A) when quantity supplied is less than quantity demanded. B) in equilibrium. C) when quantity supplied is greater than quantity demanded. D) at the market clearing price

Explanation / Answer

1. C) When the liability is unlimited as in the case of sole proprietorship and general partnership, the personal assets can be seized to pay off debts.

2. A. Regressive tax as higher tax falls on poor income earners than large income earners. The tax rate is uniform and the burden falls heavily on those who earn less.

3. D. Marginal rate is the incremental tax paid on incremental income.

4. A. Shortage is when quantity supplied is less than quantity demanded.

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