Difference Between Structural and Sufficient Statistics Approach Quiz

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What is the excess burden defined as when considering salience effects?

Change in consumer surplus due to tax changes

Loss in tax revenue minus consumer surplus

Difference between income effects and tax revenue

Difference between consumer surplus and tax revenue (correct)

In a simple model of taxation with no income effects and constant returns to production, what type of utility function is assumed?

Quasilinear utility (correct)

Quadratic utility

Logarithmic utility

Perfectly linear utility

In the context of welfare analysis with salience effects, what is the primary focus of modern literature?

Introducing structural methodologies

Deriving sufficient statistic formulas (correct)

Analyzing perfect competition models

Exploring general equilibrium theory

In the context of efficiency cost with salience effects, which curve is used to calculate the change in demand?

Tax demand curve Signup and view all the answers

What role does the fully-optimizing agent play in the observed demands under salience effects?

Determines empirical observations of demands Signup and view all the answers

What does the government levy a tax on in the described scenario involving N goods?

Good 1 Signup and view all the answers

Which approach focuses on quasi-experimental techniques to implement 'sufficient statistic' formulas for welfare analysis?

Sufficient Statistics Approach Signup and view all the answers

Which concept is central to understanding welfare analysis with salience effects?

Shift in tax incidence Signup and view all the answers

What does the fully rational consumer's reaction to tax changes imply about the tax curve?

It must be steeper than the price-demand curve Signup and view all the answers

What term is used to define the sum of spending on numeraire, individual's utility, and tax revenue to measure the excess burden of a tax?

Social welfare Signup and view all the answers

What is the focus of efficiency analysis in public economics?

Quantities Signup and view all the answers

Why does the welfare of those taxed fall by more than $1 when the government raises taxes?

Due to tax distortion of behavior Signup and view all the answers

What two assumptions are made in the analysis of Marshallian surplus?

Quasilinear utility and competitive production Signup and view all the answers

In the context of public economics, what is taxable income elasticity used to measure?

Efficiency costs of taxation Signup and view all the answers

What is the primary reason for analyzing welfare with salience effects in public economics?

To minimize deadweight costs Signup and view all the answers

What is the main purpose of using sufficient statistics in welfare analysis?

To derive the rate of change of social welfare with respect to a tax parameter Signup and view all the answers

In the context of taxable income elasticity, what does Roy's identity indicate?

The derivative of indirect utility with respect to a tax parameter Signup and view all the answers

How is private surplus related to the concept of Marshallian Surplus?

Private surplus corresponds to indirect utility Signup and view all the answers

Which approach relies on applying the envelope theorem to derive the rate of change of social welfare loss caused by tax change?

Sufficient statistics approach Signup and view all the answers

What is considered a sufficient statistic for calculating the rate of change of social welfare with respect to a tax parameter?

$\frac{dx_1}{dt}$ Signup and view all the answers

What did Feldstein propose as a sufficient statistic for calculating deadweight loss?

Elasticity of taxable income with respect to taxes Signup and view all the answers

According to Feldstein, what is included in labor supply besides the choice of hours worked?

Training and occupation Signup and view all the answers

In the context of taxation, what does the formula Z = w1 l1 + w2 l2 - e represent?

Taxable income Signup and view all the answers

What did Kleven and Schulz use as their primary source of identification for elasticity in their study?

Kink points in the tax system Signup and view all the answers

How did Saez propose to estimate the taxable income elasticity in his work?

By examining bunching at kinks in the tax system Signup and view all the answers

What is the impact on consumer surplus when the price-demand curve shows a positive surplus?

Triangle DGC Signup and view all the answers

In the context of fully optimizing agents, what adjustment is necessary to calculate EB*?

Subtracting the private welfare loss and adding the government revenue Signup and view all the answers

What is the efficiency cost without income effects in terms of excess burden when introducing a small tax?

<ul> <li>θ · (tS )^2 · ∂x/∂tS</li> </ul> Signup and view all the answers

Which area represents the surplus before tax in the graphical analysis when supply is perfectly elastic?

Triangle ABC Signup and view all the answers

What does the line AH represent in terms of the impact of tax on quantity and price in the text?

x0 − x1 S Signup and view all the answers

What is the effect of introducing a small tax on equilibrium quantity Q and on surplus?

Q decreases and surplus decreases Signup and view all the answers

In the context of Marshallian Surplus, what does Excess Burden increase with?

The square of tax rate Signup and view all the answers

Which factor leads to a larger reduction in quantity according to the text?

Higher elasticity Signup and view all the answers

What is the relationship between Excess Burden and the elasticities of goods?

Positive correlation Signup and view all the answers

In welfare analysis with salience effects, what is the role of the fully optimizing agent in determining demands?

Reveals the true demand curve Signup and view all the answers

What approach focuses on quasi-experimental techniques for implementing 'sufficient statistic' formulas for welfare analysis?

'Sufficient Statistics' approach Signup and view all the answers

In the context of taxation with constant returns to production, what type of utility function is typically assumed?

$U(x) = ext{Log}(x)$ utility function Signup and view all the answers

'Welfare Analysis' with salience effects primarily focuses on what aspect in modern literature?

'Consumer Choice Modeling' Signup and view all the answers