Question 1

Figure 8-11 
-Refer to Figure 8-11.Neither a shift of the demand curve nor a shift of the supply curve is shown on the figure.However,we know that,when the tax is imposed,

Accepted Answer

A)   the demand curve will shift.
B)   the supply curve will shift.
C)   either the demand curve or the supply curve will shift.
D)   None of the above are correct;the tax causes neither the demand curve nor the supply curve to shift.E) A) and B)
F) All of the above

Question 2

Which of the following tools help us evaluate how taxes affect economic well-being? (i) 
Consumer surplus
(ii) 
Producer surplus
(iii) 
Tax revenue
(iv) 
Deadweight loss

Accepted Answer

A)   (i) and (ii) only
B)   (i) , (ii) ,and (iii) only
C)   (iii) and (iv) only
D)   (i) , (ii) , (iii) ,and (iv) E) A) and B)
F) A) and C)

Question 3

Figure 8-5
Suppose that the government imposes a tax of P3 - P1. 
-Refer to Figure 8-5.After the tax is levied,producer surplus is represented by area

Accepted Answer

A)   A.
B)   A+B+C.
C)   D+H+F.
D)   F.E) C) and D)
F) B) and D)

Question 4

If the labor supply curve is nearly vertical,a tax on labor

Accepted Answer

A)   has a large deadweight loss.
B)   raises a small amount of tax revenue.
C)   has little impact on the amount of work that workers are willing to do.
D)   results in a large tax burden on the firms that hire labor.E) A) and B)
F) A) and C)

Question 5

Figure 8-8
Suppose the government imposes a $10 per unit tax on a good. 
-Refer to Figure 8-8.The tax causes consumer surplus to decrease by the area

Accepted Answer

A)   A.
B)   B+C.
C)   A+B+C.
D)   A+B+C+D+F.E) B) and C)
F) C) and D)

Question 6

When a tax is imposed on a good for which both demand and supply are very elastic,

Accepted Answer

A)   sellers effectively pay the majority of the tax.
B)   buyers effectively pay the majority of the tax.
C)   the tax burden is equally divided between buyers and sellers.
D)   None of the above is correct;further information would be required to determine how the burden of the tax is distributed between buyers and sellers.E) A) and C)
F) All of the above

Question 7

Figure 8-8
Suppose the government imposes a $10 per unit tax on a good. 
-Refer to Figure 8-8.The deadweight loss of the tax is the area

Accepted Answer

A)   B+D.
B)   C+F.
C)   A+C+F+J.
D)   B+C+D+F.E) None of the above
F) A) and B)

Question 8

The amount of deadweight loss from a tax depends upon the

Accepted Answer

A)   price elasticity of demand.
B)   price elasticity of supply.
C)   amount of the tax per unit.
D)   All of the above are correct.E) C) and D)
F) B) and C)

Question 9

Which of the following is a tax on labor?

Accepted Answer

A)   Medicare tax
B)   Social Security tax
C)   federal income tax
D)   All of the above are labor taxes.E) A) and B)
F) A) and C)

Question 10

In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue?

Accepted Answer

A)   The price elasticity of demand is small,and the price elasticity of supply is large.
B)   The price elasticity of demand is large,and the price elasticity of supply is small.
C)   The price elasticity of demand and the price elasticity of supply are both small.
D)   The price elasticity of demand and the price elasticity of supply are both large.E) None of the above
F) A) and B)

Question 11

The deadweight loss of a tax rises even more rapidly than the size of the tax.

Accepted Answer

A) True 
 B)False

Question 12

Assume that for good X the supply curve for a good is a typical,upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.If the good is taxed,and the tax is doubled,the

Accepted Answer

A)   base of the triangle that represents the deadweight loss doubles.
B)   height of the triangle that represents the deadweight loss doubles.
C)   deadweight loss of the tax quadruples.
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 13

As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on,the

Accepted Answer

A)   tax revenue increases at first,but it eventually peaks and then decreases.
B)   deadweight loss increases at first,but it eventually peaks and then decreases.
C)   tax revenue always increases,and the deadweight loss always increases.
D)   tax revenue always decreases,and the deadweight loss always increases.E) B) and C)
F) B) and D)

Question 14

In 1776,the American Revolution was sparked by anger over

Accepted Answer

A)   the extravagant lifestyle of British royalty.
B)   the crimes of British soldiers stationed in the American colonies.
C)   British taxes imposed on the American colonies.
D)   the failure of the British to protect American colonists from attack by hostile Native Americans.E) A) and B)
F) B) and D)

Question 15

Suppose the demand curve and the supply curve in a market are both linear,and suppose the price elasticity of supply is 0.5.Will the deadweight loss from a $3 tax per unit be larger if the price elasticity of demand is 0.3 or if the price elasticity of demand is 0.7?

Accepted Answer

The deadweight loss ...

Question 16

In the market for widgets,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.The equilibrium quantity in the market for widgets is 200 per month when there is no tax.Then a tax of $5 per widget is imposed.The price paid by buyers increases by $2 and the after-tax price received by sellers falls by $3.The government is able to raise $750 per month in revenue from the tax.The deadweight loss from the tax is

Accepted Answer

A)   $250.
B)   $125.
C)   $75.
D)   $50.E) B) and D)
F) All of the above

Question 17

Figure 8-19.The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. 
-Refer to Figure 8-19.If the economy is at point A on the curve,then a small increase in the tax rate will

Accepted Answer

A)   increase the deadweight loss of the tax and increase tax revenue.
B)   increase the deadweight loss of the tax and decrease tax revenue.
C)   decrease the deadweight loss of the tax and increase tax revenue.
D)   decrease the deadweight loss of the tax and decrease tax revenue.E) None of the above
F) A) and B)

Question 18

If the tax on gasoline increases from $2 to $4 per gallon,the deadweight loss from the tax increases by a factor of

Accepted Answer

A)   one-half.
B)   two.
C)   four.
D)   six.E) A) and B)
F) A) and C)

Question 19

Figure 8-3 
-Refer to Figure 8-3.Suppose the government places a $4 tax per unit on this good.What price will sellers receive for the good after the tax is imposed?

Accepted Answer

Sellers will receive...

Question 20

When the government places a tax on a product,the cost of the tax to buyers and sellers

Accepted Answer

A)   is less than the revenue raised from the tax by the government.
B)   is equal to the revenue raised from the tax by the government.
C)   exceeds the revenue raised from the tax by the government.
D)   Without additional information,such as the elasticity of demand for this product,it is impossible to compare the cost of a tax to buyers and sellers with tax revenue.E) A) and D)
F) All of the above

Exam 8: Application: The Costs of Taxation

Figure 8-11 -Refer to Figure 8-11.Neither a shift of the demand curve nor a shift of the supply curve is shown on the figure.However,we know that,when the tax is imposed,

Correct Answer
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When the government places a tax on a product,the cost of the tax to buyers and sellers

Correct Answer
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Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. -Refer to Figure 8-8.The tax causes consumer surplus to decrease by the area

Correct Answer
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If the tax on gasoline increases from $2 to $4 per gallon,the deadweight loss from the tax increases by a factor of

Correct Answer
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Figure 8-3 -Refer to Figure 8-3.Suppose the government places a $4 tax per unit on this good.What price will sellers receive for the good after the tax is imposed?

Correct Answer
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Sellers will receive...
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Assume that for good X the supply curve for a good is a typical,upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.If the good is taxed,and the tax is doubled,the

Correct Answer
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Which of the following tools help us evaluate how taxes affect economic well-being? (i) Consumer surplus (ii) Producer surplus (iii) Tax revenue (iv) Deadweight loss

Correct Answer
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When a tax is imposed on a good for which both demand and supply are very elastic,

Correct Answer
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The deadweight loss of a tax rises even more rapidly than the size of the tax.

Correct Answer
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Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.After the tax is levied,producer surplus is represented by area

Correct Answer
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Suppose the demand curve and the supply curve in a market are both linear,and suppose the price elasticity of supply is 0.5.Will the deadweight loss from a $3 tax per unit be larger if the price elasticity of demand is 0.3 or if the price elasticity of demand is 0.7?

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The deadweight loss ...
View Answer

Which of the following is a tax on labor?

Correct Answer
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If the labor supply curve is nearly vertical,a tax on labor

Correct Answer
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As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on,the

Correct Answer
verified

The amount of deadweight loss from a tax depends upon the

Correct Answer
verified

Correct Answer
verified

Figure 8-19.The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. -Refer to Figure 8-19.If the economy is at point A on the curve,then a small increase in the tax rate will

Correct Answer
verified

Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. -Refer to Figure 8-8.The deadweight loss of the tax is the area

Correct Answer
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In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue?

Correct Answer
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In 1776,the American Revolution was sparked by anger over

Correct Answer
verified

Exam 8: Application: The Costs of Taxation

Figure 8-11 -Refer to Figure 8-11.Neither a shift of the demand curve nor a shift of the supply curve is shown on the figure.However,we know that,when the tax is imposed,

Correct AnswerverifiedShow Answer

When the government places a tax on a product,the cost of the tax to buyers and sellers

Correct AnswerverifiedShow Answer

Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. -Refer to Figure 8-8.The tax causes consumer surplus to decrease by the area

Correct AnswerverifiedShow Answer

If the tax on gasoline increases from $2 to $4 per gallon,the deadweight loss from the tax increases by a factor of

Correct AnswerverifiedShow Answer

Figure 8-3 -Refer to Figure 8-3.Suppose the government places a $4 tax per unit on this good.What price will sellers receive for the good after the tax is imposed?

Correct AnswerverifiedSellers will receive...View AnswerShow Answer

Assume that for good X the supply curve for a good is a typical,upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.If the good is taxed,and the tax is doubled,the

Correct AnswerverifiedShow Answer

Which of the following tools help us evaluate how taxes affect economic well-being? (i) Consumer surplus (ii) Producer surplus (iii) Tax revenue (iv) Deadweight loss

Correct AnswerverifiedShow Answer

When a tax is imposed on a good for which both demand and supply are very elastic,

Correct AnswerverifiedShow Answer

The deadweight loss of a tax rises even more rapidly than the size of the tax.

Correct AnswerverifiedShow Answer

Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.After the tax is levied,producer surplus is represented by area

Correct AnswerverifiedShow Answer

Suppose the demand curve and the supply curve in a market are both linear,and suppose the price elasticity of supply is 0.5.Will the deadweight loss from a $3 tax per unit be larger if the price elasticity of demand is 0.3 or if the price elasticity of demand is 0.7?

Correct AnswerverifiedThe deadweight loss ...View AnswerShow Answer

Which of the following is a tax on labor?

Correct AnswerverifiedShow Answer

If the labor supply curve is nearly vertical,a tax on labor

Correct AnswerverifiedShow Answer

As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on,the

Correct AnswerverifiedShow Answer

The amount of deadweight loss from a tax depends upon the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 8-19.The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. -Refer to Figure 8-19.If the economy is at point A on the curve,then a small increase in the tax rate will

Correct AnswerverifiedShow Answer

Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. -Refer to Figure 8-8.The deadweight loss of the tax is the area

Correct AnswerverifiedShow Answer

In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue?

Correct AnswerverifiedShow Answer

In 1776,the American Revolution was sparked by anger over

Correct AnswerverifiedShow Answer

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Sellers will receive...
View Answer

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The deadweight loss ...
View Answer

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