Question 1

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) All of the above
F) C) and D)

Question 2

When the government imposes taxes on buyers or sellers of a good,society

Accepted Answer

A)   loses some of the benefits of market efficiency.
B)   gains efficiency but loses equality.
C)   is better off because the government's tax revenues exceed the deadweight loss.
D)   moves from an elastic supply curve to an inelastic supply curve.E) A) and B)
F) A) and C)

Question 3

Taxes on labor have the effect of encouraging

Accepted Answer

A)   workers to work more hours.
B)   the elderly to postpone retirement.
C)   second earners within a family to take a job.
D)   unscrupulous people to take part in the underground economy.E) C) and D)
F) None of the above

Question 4

In the early 1980s,which of the following countries had a marginal tax rate of about 80 percent?

Accepted Answer

A)   United States
B)   Canada
C)   Japan
D)   SwedenE) A) and C)
F) A) and B)

Question 5

Figure 8-3
The vertical distance between points A and C represents a tax in the market.
 
-Refer to Figure 8-3.The amount of the tax on each unit of the good is

Accepted Answer

A)   P3 - P1.
B)   P3 - P2.
C)   P2 - P1.
D)   P4 - P3.E) A) and C)
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.Consumer surplus before the tax was levied is represented by area

Accepted Answer

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

Question 7

Figure 8-11
 
-Refer to Figure 8-11.The price labeled as P₃ on the vertical axis represents the price

Accepted Answer

A)   received by sellers before the tax is imposed.
B)   received by sellers after the tax is imposed.
C)   paid by buyers before the tax is imposed.
D)   paid by buyers after the tax is imposed.E) B) and C)
F) A) and B)

Question 8

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) A) and B)
F) B) and D)

Question 9

Figure 8-9
The vertical distance between points A and C represent a tax in the market.
 
-Refer to Figure 8-9.The imposition of the tax causes the price paid by buyers to increase by

Accepted Answer

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

Question 10

A tax

Accepted Answer

A)   lowers the price buyers pay and raises the price sellers receive.
B)   raises the price buyers pay and lowers the price sellers receive.
C)   places a wedge between the price buyers pay and the price sellers receive.
D)   Both b)  and c)  are correct.E) None of the above
F) A) and C)

Question 11

As the size of a tax rises,the deadweight loss

Accepted Answer

A)   rises, and tax revenue first rises, then falls.
B)   rises as does tax revenue.
C)   falls, and tax revenue first rises, then falls.
D)   falls as does tax revenue.E) None of the above
F) B) and D)

Question 12

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) B) and C)
F) A) and B)

Question 13

The greater the elasticity of demand,the smaller the deadweight loss of a tax.

Accepted Answer

A) True 
 B)False

Question 14

Suppose the tax on liquor is increased so that the tax goes from being a "medium" tax to being a "large" tax.As a result,it is likely that

Accepted Answer

A)   tax revenue increases, and the deadweight loss increases.
B)   tax revenue increases, and the deadweight loss decreases.
C)   tax revenue decreases, and the deadweight loss increases.
D)   tax revenue decreases, and the deadweight loss decreases.E) B) and D)
F) C) and D)

Question 15

Figure 8-11
 
-Refer to Figure 8-11.The price labeled as P₂ on the vertical axis represents the

Accepted Answer

A)   difference between the price paid by buyers after the tax is imposed and the price paid by buyers before the tax is imposed.
B)   difference between the price received by sellers before the tax is imposed and the price received by sellers after the tax is imposed.
C)   price of the good before the tax is imposed.
D)   price of the good after the tax is imposed.E) C) and D)
F) All of the above

Question 16

Figure 8-9
The vertical distance between points A and C represent a tax in the market.
 
-Refer to Figure 8-9.The producer surplus without the tax is

Accepted Answer

A)   $3,000.
B)   $8,000.
C)   $12,000.
D)   $24,000.E) A) and D)
F) A) and B)

Question 17

Figure 8-1
 
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The producer surplus after the tax is measured by the area

Accepted Answer

A)   M.
B)   L+M+N+Y+B.
C)   L+M+Y.
D)   J.E) A) and B)
F) A) and C)

Question 18

Suppose a tax is imposed on the sellers of fast-food French fries.The burden of the tax will

Accepted Answer

A)   fall entirely on the buyers of fast-food French fries.
B)   fall entirely on the sellers of fast-food French fries.
C)   be shared equally by the buyers and sellers of fast-food French fries.
D)   be shared by the buyers and sellers of fast-food French fries but not necessarily equally.E) C) and D)
F) All of the above

Question 19

Figure 8-2
The vertical distance between points A and B represents a tax in the market.
 
-Refer to Figure 8-2.The loss of producer surplus associated with some sellers dropping out of the market as a result of the tax is

Accepted Answer

A)   $0.
B)   $1.
C)   $2.
D)   $3.E) A) and C)
F) C) and D)

Question 20

A tax levied on the sellers of a good shifts the

Accepted Answer

A)   supply curve upward (or to the left) .
B)   supply curve downward (or to the right) .
C)   demand curve upward (or to the right) .
D)   demand curve downward (or to the left) .E) A) and D)
F) None of the above

Exam 8: Application: The Costs of Taxation.

A tax

Correct Answer
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As the size of a tax rises,the deadweight loss

Correct Answer
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The greater the elasticity of demand,the smaller the deadweight loss of a tax.

Correct Answer
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Suppose the tax on liquor is increased so that the tax goes from being a "medium" tax to being a "large" tax.As a result,it is likely that

Correct Answer
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Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3.The amount of the tax on each unit of the good is

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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Taxes on labor have the effect of encouraging

Correct Answer
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When the government imposes taxes on buyers or sellers of a good,society

Correct Answer
verified

Figure 8-11 -Refer to Figure 8-11.The price labeled as P₃ on the vertical axis represents the price

Correct Answer
verified

Suppose a tax is imposed on the sellers of fast-food French fries.The burden of the tax will

Correct Answer
verified

Figure 8-9 The vertical distance between points A and C represent a tax in the market. -Refer to Figure 8-9.The producer surplus without the tax is

Correct Answer
verified

In the early 1980s,which of the following countries had a marginal tax rate of about 80 percent?

Correct Answer
verified

Figure 8-1 -Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The producer surplus after the tax is measured by the area

Correct Answer
verified

Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.Consumer surplus before the tax was levied is represented by area

Correct Answer
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Figure 8-11 -Refer to Figure 8-11.The price labeled as P₂ on the vertical axis represents the

Correct Answer
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Figure 8-2 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-2.The loss of producer surplus associated with some sellers dropping out of the market as a result of the tax is

Correct Answer
verified

A tax levied on the sellers of a good shifts the

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
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Figure 8-9 The vertical distance between points A and C represent a tax in the market. -Refer to Figure 8-9.The imposition of the tax causes the price paid by buyers to increase by

Correct Answer
verified

Exam 8: Application: The Costs of Taxation.

A tax

Correct AnswerverifiedShow Answer

As the size of a tax rises,the deadweight loss

Correct AnswerverifiedShow Answer

The greater the elasticity of demand,the smaller the deadweight loss of a tax.

Correct AnswerverifiedShow Answer

Suppose the tax on liquor is increased so that the tax goes from being a "medium" tax to being a "large" tax.As a result,it is likely that

Correct AnswerverifiedShow Answer

Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3.The amount of the tax on each unit of the good is

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

Taxes on labor have the effect of encouraging

Correct AnswerverifiedShow Answer

When the government imposes taxes on buyers or sellers of a good,society

Correct AnswerverifiedShow Answer

Figure 8-11 -Refer to Figure 8-11.The price labeled as P₃ on the vertical axis represents the price

Correct AnswerverifiedShow Answer

Suppose a tax is imposed on the sellers of fast-food French fries.The burden of the tax will

Correct AnswerverifiedShow Answer

Figure 8-9 The vertical distance between points A and C represent a tax in the market. -Refer to Figure 8-9.The producer surplus without the tax is

Correct AnswerverifiedShow Answer

In the early 1980s,which of the following countries had a marginal tax rate of about 80 percent?

Correct AnswerverifiedShow Answer

Figure 8-1 -Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The producer surplus after the tax is measured by the area

Correct AnswerverifiedShow Answer

Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.Consumer surplus before the tax was levied is represented by area

Correct AnswerverifiedShow Answer

Figure 8-11 -Refer to Figure 8-11.The price labeled as P₂ on the vertical axis represents the

Correct AnswerverifiedShow Answer

Figure 8-2 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-2.The loss of producer surplus associated with some sellers dropping out of the market as a result of the tax is

Correct AnswerverifiedShow Answer

A tax levied on the sellers of a good shifts the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 8-9 The vertical distance between points A and C represent a tax in the market. -Refer to Figure 8-9.The imposition of the tax causes the price paid by buyers to increase by

Correct AnswerverifiedShow Answer

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