38 Questions
What is the excess burden defined as when considering salience effects?
Difference between consumer surplus and tax revenue
In a simple model of taxation with no income effects and constant returns to production, what type of utility function is assumed?
Quasilinear utility
In the context of welfare analysis with salience effects, what is the primary focus of modern literature?
Deriving sufficient statistic formulas
In the context of efficiency cost with salience effects, which curve is used to calculate the change in demand?
Tax demand curve
What role does the fully-optimizing agent play in the observed demands under salience effects?
Determines empirical observations of demands
What does the government levy a tax on in the described scenario involving N goods?
Good 1
Which approach focuses on quasi-experimental techniques to implement 'sufficient statistic' formulas for welfare analysis?
Sufficient Statistics Approach
Which concept is central to understanding welfare analysis with salience effects?
Shift in tax incidence
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
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
What is the focus of efficiency analysis in public economics?
Quantities
Why does the welfare of those taxed fall by more than $1 when the government raises taxes?
Due to tax distortion of behavior
What two assumptions are made in the analysis of Marshallian surplus?
Quasilinear utility and competitive production
In the context of public economics, what is taxable income elasticity used to measure?
Efficiency costs of taxation
What is the primary reason for analyzing welfare with salience effects in public economics?
To minimize deadweight costs
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
In the context of taxable income elasticity, what does Roy's identity indicate?
The derivative of indirect utility with respect to a tax parameter
How is private surplus related to the concept of Marshallian Surplus?
Private surplus corresponds to indirect utility
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
What is considered a sufficient statistic for calculating the rate of change of social welfare with respect to a tax parameter?
$\frac{dx_1}{dt}$
What did Feldstein propose as a sufficient statistic for calculating deadweight loss?
Elasticity of taxable income with respect to taxes
According to Feldstein, what is included in labor supply besides the choice of hours worked?
Training and occupation
In the context of taxation, what does the formula Z = w1 l1 + w2 l2 - e represent?
Taxable income
What did Kleven and Schulz use as their primary source of identification for elasticity in their study?
Kink points in the tax system
How did Saez propose to estimate the taxable income elasticity in his work?
By examining bunching at kinks in the tax system
What is the impact on consumer surplus when the price-demand curve shows a positive surplus?
Triangle DGC
In the context of fully optimizing agents, what adjustment is necessary to calculate EB*?
Subtracting the private welfare loss and adding the government revenue
What is the efficiency cost without income effects in terms of excess burden when introducing a small tax?
- θ · (tS )^2 · ∂x/∂tS
Which area represents the surplus before tax in the graphical analysis when supply is perfectly elastic?
Triangle ABC
What does the line AH represent in terms of the impact of tax on quantity and price in the text?
x0 − x1 S
What is the effect of introducing a small tax on equilibrium quantity Q and on surplus?
Q decreases and surplus decreases
In the context of Marshallian Surplus, what does Excess Burden increase with?
The square of tax rate
Which factor leads to a larger reduction in quantity according to the text?
Higher elasticity
What is the relationship between Excess Burden and the elasticities of goods?
Positive correlation
In welfare analysis with salience effects, what is the role of the fully optimizing agent in determining demands?
Reveals the true demand curve
What approach focuses on quasi-experimental techniques for implementing 'sufficient statistic' formulas for welfare analysis?
'Sufficient Statistics' approach
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
'Welfare Analysis' with salience effects primarily focuses on what aspect in modern literature?
'Consumer Choice Modeling'
This quiz covers the difference between structural and sufficient statistics approaches in economics, specifically focusing on modern literature's emphasis on deriving 'sufficient statistic' formulas for quasi-experimental techniques. Topics include Marshallian surplus, taxable income elasticity, welfare analysis with salience effects, and the distinction between structural and quasi-experimental methodologies.
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