Question 1

When a tax is levied on a good,

Accepted Answer

A)  neither buyers nor sellers are made worse off.
B)  only sellers are made worse off.
C)  only buyers are made worse off.
D)  both buyers and sellers are made worse off.E) B) and C)
F) A) and C)

Question 2

Figure 8-6
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-6. What happens to total surplus in this market when the tax is imposed?

Accepted Answer

A)  Total surplus increases by $1,500.
B)  Total surplus increases by $3,000.
C)  Total surplus decreases by $1,500.
D)  Total surplus decreases by $,3000.E) All of the above
F) A) and C)

Question 3

A tax on a good causes the size of the market to increase.

Accepted Answer

A) True 
 B)False

Question 4

Figure 8-3
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-3. The loss in producer surplus caused by the tax is measured by the area

Accepted Answer

A)  ABC.
B)  P1P3ABC.
C)  P1P2BC.
D)  P1C0.E) A) and D)
F) C) and D)

Question 5

When a good is taxed,

Accepted Answer

A)  both buyers and sellers of the good are made worse off.
B)  only buyers are made worse off, because they ultimately bear the burden of the tax.
C)  only sellers are made worse off, because they ultimately bear the burden of the tax.
D)  neither buyers nor sellers are made worse off, since tax revenue is used to provide goods and services that would otherwise not be provided in a market economy.E) A) and D)
F) All of the above

Question 6

Figure 8-5
Suppose that the government imposes a tax of P3 - P1. 
-Refer to Figure 8-5. The equilibrium price before the tax is imposed is

Accepted Answer

A)  P1.
B)  P2.
C)  P3.
D)  P4.E) C) and D)
F) A) and D)

Question 7

The Laffer curve illustrates how taxes in markets with greater elasticities of demand compare to taxes in markets with smaller elasticities of supply.

Accepted Answer

A) True 
 B)False

Question 8

The Laffer curve is the curve showing how tax revenue varies as the size of the tax varies.

Accepted Answer

A) True 
 B)False

Question 9

Consider a good to which a per-unit tax applies. The size of the deadweight that results from the tax is smaller, the

Accepted Answer

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

Question 10

The marginal tax rate on labor income for many workers in the United States is almost

Accepted Answer

A)  30 percent.
B)  40 percent.
C)  50 percent.
D)  65 percent.E) All of the above
F) None of the above

Question 11

Taxes are of interest to

Accepted Answer

A)  microeconomists because they consider how to balance equality and efficiency.
B)  microeconomists because they consider how best to design a tax system.
C)  macroeconomists because they consider how policymakers can use the tax system to stabilize economic activity.
D)  All of the above are correct.E) None of the above
F) A) and C)

Question 12

An increase in the size of a tax is most likely to increase tax revenue in a market with

Accepted Answer

A)  elastic demand and elastic supply.
B)  elastic demand and inelastic supply.
C)  inelastic demand and elastic supply.
D)  inelastic demand and inelastic supply.E) A) and C)
F) A) and D)

Question 13

In which of the following instances would the deadweight loss of the tax on cartons of cigarettes increase by a factor of 9?

Accepted Answer

A)  The tax on cartons of cigarettes increases from $10 to $11.11.
B)  The tax on cartons of cigarettes increases from $10 to $20.
C)  The tax on cartons of cigarettes increases from $10 to $30.
D)  The tax on cartons of cigarettes increases from $10 to $90.E) B) and C)
F) None of the above

Question 14

When motorcycles are taxed and sellers of motorcycles are required to pay the tax to the government,

Accepted Answer

A)  the quantity of motorcycles bought and sold in the market is reduced.
B)  the price paid by buyers of motorcycles decreases.
C)  the demand for motorcycles decreases.
D)  there is a movement downward and to the right along the demand curve for motorcycles.E) B) and D)
F) None of the above

Question 15

Suppose a tax of $3 per unit is imposed on a good. The supply curve is a typical upward-sloping straight line, and the demand curve is a typical downward-sloping straight line. The tax decreases consumer surplus by $3,900 and decreases producer surplus by $3,000. The tax generates tax revenue of $6,000. The tax decreased the equilibrium quantity of the good from

Accepted Answer

A)  2,000 to 1,500.
B)  2,400 to 2,000.
C)  2,600 to 2,000.
D)  3,000 to 2,400.E) None of the above
F) B) and C)

Question 16

Figure 8-9
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-9. The per-unit burden of the tax on buyers is

Accepted Answer

A)  $20.
B)  $200.
C)  $300.
D)  $500.E) C) and D)
F) A) and C)

Question 17

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 C)
F) B) and C)

Question 18

If the government imposes a $3 tax in a market, the buyers and sellers will share an equal burden of the tax.

Accepted Answer

A) True 
 B)False

Question 19

Scenario 8-3
Suppose the market demand and market supply curves are given by the equations: 
-Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes:  If T = 40, how many units will be bought and sold after the tax is imposed?

Accepted Answer

120 units will be bo...

Question 20

Figure 8-6
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-6. When the tax is placed on this good, the quantity sold

Accepted Answer

A)  is 600, and buyers effectively pay $10.
B)  is 300, and buyers effectively pay $10.
C)  is 600, and buyers effectively pay $16.
D)  is 300, and buyers effectively pay $16.E) None of the above
F) B) and D)

Exam 8: Application: The Costs of Taxation

Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3. The loss in producer surplus caused by the tax is measured by the area

Correct Answer
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When a good is taxed,

Correct Answer
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Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5. The equilibrium price before the tax is imposed is

Correct Answer
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In which of the following instances would the deadweight loss of the tax on cartons of cigarettes increase by a factor of 9?

Correct Answer
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Figure 8-6 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-6. When the tax is placed on this good, the quantity sold

Correct Answer
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The Laffer curve illustrates how taxes in markets with greater elasticities of demand compare to taxes in markets with smaller elasticities of supply.

Correct Answer
verified

Figure 8-6 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-6. What happens to total surplus in this market when the tax is imposed?

Correct Answer
verified

A tax on a good causes the size of the market to increase.

Correct Answer
verified

Which of the following is a tax on labor?

Correct Answer
verified

Correct Answer
verified

When a tax is levied on a good,

Correct Answer
verified

The Laffer curve is the curve showing how tax revenue varies as the size of the tax varies.

Correct Answer
verified

Figure 8-9 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-9. The per-unit burden of the tax on buyers is

Correct Answer
verified

An increase in the size of a tax is most likely to increase tax revenue in a market with

Correct Answer
verified

Scenario 8-3 Suppose the market demand and market supply curves are given by the equations: -Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes: If T = 40, how many units will be bought and sold after the tax is imposed?

Correct Answer
verified
120 units will be bo...
View Answer

Consider a good to which a per-unit tax applies. The size of the deadweight that results from the tax is smaller, the

Correct Answer
verified

Taxes are of interest to

Correct Answer
verified

The marginal tax rate on labor income for many workers in the United States is almost

Correct Answer
verified

If the government imposes a $3 tax in a market, the buyers and sellers will share an equal burden of the tax.

Correct Answer
verified

When motorcycles are taxed and sellers of motorcycles are required to pay the tax to the government,

Correct Answer
verified

Exam 8: Application: The Costs of Taxation

Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3. The loss in producer surplus caused by the tax is measured by the area

Correct AnswerverifiedShow Answer

When a good is taxed,

Correct AnswerverifiedShow Answer

Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5. The equilibrium price before the tax is imposed is

Correct AnswerverifiedShow Answer

In which of the following instances would the deadweight loss of the tax on cartons of cigarettes increase by a factor of 9?

Correct AnswerverifiedShow Answer

Figure 8-6 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-6. When the tax is placed on this good, the quantity sold

Correct AnswerverifiedShow Answer

The Laffer curve illustrates how taxes in markets with greater elasticities of demand compare to taxes in markets with smaller elasticities of supply.

Correct AnswerverifiedShow Answer

Figure 8-6 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-6. What happens to total surplus in this market when the tax is imposed?

Correct AnswerverifiedShow Answer

A tax on a good causes the size of the market to increase.

Correct AnswerverifiedShow Answer

Which of the following is a tax on labor?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a tax is levied on a good,

Correct AnswerverifiedShow Answer

The Laffer curve is the curve showing how tax revenue varies as the size of the tax varies.

Correct AnswerverifiedShow Answer

Figure 8-9 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-9. The per-unit burden of the tax on buyers is

Correct AnswerverifiedShow Answer

An increase in the size of a tax is most likely to increase tax revenue in a market with

Correct AnswerverifiedShow Answer

Scenario 8-3 Suppose the market demand and market supply curves are given by the equations: -Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes: If T = 40, how many units will be bought and sold after the tax is imposed?

Correct Answerverified120 units will be bo...View AnswerShow Answer

Consider a good to which a per-unit tax applies. The size of the deadweight that results from the tax is smaller, the

Correct AnswerverifiedShow Answer

Taxes are of interest to

Correct AnswerverifiedShow Answer

The marginal tax rate on labor income for many workers in the United States is almost

Correct AnswerverifiedShow Answer

If the government imposes a $3 tax in a market, the buyers and sellers will share an equal burden of the tax.

Correct AnswerverifiedShow Answer

When motorcycles are taxed and sellers of motorcycles are required to pay the tax to the government,

Correct AnswerverifiedShow Answer

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120 units will be bo...
View Answer

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