Question 1

Figure 8-2
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-2.The imposition of the tax causes the quantity sold to

Accepted Answer

A)   increase by 1 unit.
B)   decrease by 1 unit.
C)   increase by 2 units.
D)   decrease by 2 units.E) B) and D)
F) B) and C)

Question 2

The more elastic the supply,the larger the deadweight loss from a tax,all else equal.

Accepted Answer

A) True 
 B)False

Question 3

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 imposed in this market,the price sellers effectively receive is

Accepted Answer

A)   $4.
B)   $6.
C)   $10.
D)   $16.E) B) and D)
F) B) and C)

Question 4

Figure 8-1 
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by I+Y represents the

Accepted Answer

A)   deadweight loss due to the tax.
B)   loss in consumer surplus due to the tax.
C)   loss in producer surplus due to the tax.
D)   total surplus before the tax.E) A) and B)
F) B) and D)

Question 5

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

Question 6

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

Question 7

Figure 8-4
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-4.The price that buyers effectively pay after the tax is imposed is

Accepted Answer

A)   $12.
B)   between $8 and $12.
C)   between $5 and $8.
D)   $5.E) B) and C)
F) A) and B)

Question 8

A $3.50 tax per gallon of paint placed on the sellers of paint will shift the supply curve

Accepted Answer

A)   downward by exactly $3.50.
B)   downward by less than $3.50.
C)   upward by exactly $3.50.
D)   upward by less than $3.50.E) B) and D)
F) B) and C)

Question 9

The graph that represents the amount of deadweight loss (measured on the vertical axis) as a function of the size of the tax (measured on the horizontal axis) looks like

Accepted Answer

A)   a U.
B)   an upside-down U.
C)   a horizontal straight line.
D)   an upward-sloping curve.E) A) and B)
F) A) and D)

Question 10

Figure 8-10 
-Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.The size of the tax is

Accepted Answer

A)   P0-P2.
B)   P2-P8.
C)   P2-P5.
D)   P5-P8.E) A) and B)
F) None of the above

Question 11

Figure 8-10 
-Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.With the tax,the producer surplus is

Accepted Answer

A)   (P5-0) x Q5.
B)   x (P5-0) x Q5.
C)   (P8-0) x Q2.
D)   x (P8-0) x Q2.E) A) and D)
F) B) and C)

Question 12

Figure 8-2
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-2.Producer surplus without the tax is

Accepted Answer

A)   $4,and producer surplus with the tax is $1.
B)   $4,and producer surplus with the tax is $3.
C)   $10,and producer surplus with the tax is $1.
D)   $10,and producer surplus with the tax is $3.E) B) and C)
F) A) and B)

Question 13

To measure the gains and losses from a tax on a good,economists use the tools of

Accepted Answer

A)   macroeconomics.
B)   welfare economics.
C)   international-trade theory.
D)   circular-flow analysis.E) A) and B)
F) A) and C)

Question 14

Figure 8-7
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-7.As a result of the tax,buyers effectively pay

Accepted Answer

A)   $16 for each unit of the good,and sellers effectively receive $12 for each unit of the good.
B)   $16 for each unit of the good,and sellers effectively receive $8 for each unit of the good.
C)   $12 for each unit of the good,and sellers effectively receive $8 for each unit of the good.
D)   $14 for each unit of the good,and sellers effectively receive $10 for each unit of the good.E) None of the above
F) All of the above

Question 15

Figure 8-17
The vertical distance between points A and B represents the original tax. 
-Refer to Figure 8-17.The original tax can be represented by the vertical distance AB.Suppose the government is deciding whether to lower the tax to CD or raise it to FG.Which of the following statements is correct?

Accepted Answer

A)   Compared to the original tax,the larger tax will decrease both tax revenue and deadweight loss.
B)   Compared to the original tax,the smaller tax will increase both tax revenue and deadweight loss.
C)   Compared to the original tax,the larger tax will decrease tax revenue and increase deadweight loss.
D)   Both a and b are correct.E) B) and D)
F) B) and C)

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

If a tax shifts the supply curve downward (or to the right) ,we can infer that the tax was levied on

Accepted Answer

A)   buyers of the good.
B)   sellers of the good.
C)   both buyers and sellers of the good.
D)   We cannot infer anything because the shift described is not consistent with a tax.E) A) and B)
F) All of the above

Question 18

Using demand and supply diagrams,show the difference in deadweight loss between (a)a market with inelastic demand and supply and (b)a market with elastic demand and supply.

Accepted Answer

The answer of Using demand and supply diagrams,show the difference...

Question 19

Which of the following scenarios is not consistent with the Laffer curve?

Accepted Answer

A)   The tax rate is very low,and tax revenue is very low.
B)   The tax rate is very high,and tax revenue is very low.
C)   The tax rate is very high,and tax revenue is very high.
D)   The tax rate is moderate (between very high and very low) ,and tax revenue is relatively high.E) None of the above
F) B) and D)

Question 20

The size of the deadweight loss generated from a tax is affected by the

Accepted Answer

A)   elasticities of both supply and demand.
B)   elasticity of demand only.
C)   elasticity of supply only.
D)   total revenue collected by the government.E) B) and C)
F) A) and D)

Exam 8: Application: the Costs of Taxation

Figure 8-10 -Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.The size of the tax is

Correct Answer
verified

Figure 8-2 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-2.Producer surplus without the tax is

Correct Answer
verified

The more elastic the supply,the larger the deadweight loss from a tax,all else equal.

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.When the tax is imposed in this market,the price sellers effectively receive is

Correct Answer
verified

Figure 8-10 -Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.With the tax,the producer surplus is

Correct Answer
verified

Using demand and supply diagrams,show the difference in deadweight loss between (a)a market with inelastic demand and supply and (b)a market with elastic demand and supply.

Correct Answer
verified

Figure 8-2 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-2.The imposition of the tax causes the quantity sold to

Correct Answer
verified

Figure 8-1 -Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by I+Y represents the

Correct Answer
verified

Correct Answer
verified

To measure the gains and losses from a tax on a good,economists use the tools of

Correct Answer
verified

A $3.50 tax per gallon of paint placed on the sellers of paint will shift the supply curve

Correct Answer
verified

Figure 8-4 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-4.The price that buyers effectively pay after the tax is imposed is

Correct Answer
verified

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

Correct Answer
verified

If a tax shifts the supply curve downward (or to the right) ,we can infer that the tax was levied on

Correct Answer
verified

Figure 8-7 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-7.As a result of the tax,buyers effectively pay

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 8-2 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

The size of the deadweight loss generated from a tax is affected by the

Correct Answer
verified

Which of the following scenarios is not consistent with the Laffer curve?

Correct Answer
verified

The graph that represents the amount of deadweight loss (measured on the vertical axis) as a function of the size of the tax (measured on the horizontal axis) looks like

Correct Answer
verified

Exam 8: Application: the Costs of Taxation

Figure 8-10 -Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.The size of the tax is

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.Producer surplus without the tax is

Correct AnswerverifiedShow Answer

The more elastic the supply,the larger the deadweight loss from a tax,all else equal.

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 imposed in this market,the price sellers effectively receive is

Correct AnswerverifiedShow Answer

Figure 8-10 -Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.With the tax,the producer surplus is

Correct AnswerverifiedShow Answer

Using demand and supply diagrams,show the difference in deadweight loss between (a)a market with inelastic demand and supply and (b)a market with elastic demand and supply.

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 imposition of the tax causes the quantity sold to

Correct AnswerverifiedShow Answer

Figure 8-1 -Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by I+Y represents the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

To measure the gains and losses from a tax on a good,economists use the tools of

Correct AnswerverifiedShow Answer

A $3.50 tax per gallon of paint placed on the sellers of paint will shift the supply curve

Correct AnswerverifiedShow Answer

Figure 8-4 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-4.The price that buyers effectively pay after the tax is imposed is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a tax shifts the supply curve downward (or to the right) ,we can infer that the tax was levied on

Correct AnswerverifiedShow Answer

Figure 8-7 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-7.As a result of the tax,buyers effectively pay

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 8-2 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

The size of the deadweight loss generated from a tax is affected by the

Correct AnswerverifiedShow Answer

Which of the following scenarios is not consistent with the Laffer curve?

Correct AnswerverifiedShow Answer

The graph that represents the amount of deadweight loss (measured on the vertical axis) as a function of the size of the tax (measured on the horizontal axis) looks like

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified