Question 1

As the price elasticities of supply and demand increase,the deadweight loss from a tax increases.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is correct regarding the imposition of a tax on gasoline?

Accepted Answer

A)  The incidence of the tax depends upon whether the buyers or the sellers are required to remit tax payments to the government.
B)  The incidence of the tax depends upon the price elasticities of demand and supply.
C)  The amount of tax revenue raised by the tax depends upon whether the buyers or the sellers are required to remit tax payments to the government.
D)  The amount of tax revenue raised by the tax does not depend upon the amount of the tax per unit.E) B) and C)
F) None of the above

Question 3

The deadweight loss from a 3 pound tax will be largest in a market with

Accepted Answer

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

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 price that buyers effectively pay after the tax is imposed is

Accepted Answer

A)  P1.
B)  P2.
C)  P3.
D)  P4.E) B) and C)
F) None of the above

Question 5

The decrease in total surplus that results from a market distortion,such as a tax,is called a

Accepted Answer

A)  wedge loss.
B)  revenue loss.
C)  deadweight loss.
D)  consumer surplus loss.E) B) and C)
F) B) and D)

Question 6

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

Accepted Answer

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

Question 7

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 consumer surplus is

Accepted Answer

A)  (P0-P2) x Q2.
B)    1/21 / 21/2  x (P0-P2) x Q2.
C)  (P0-P5) x Q5.
D)    1/21 / 21/2  x (P0-P5) x Q5. E) B) and C)
F) A) and B)

Question 8

When a tax is placed on the buyers of a product,a result is that buyers effectively pay

Accepted Answer

A)  less than before the tax,and sellers effectively receive less than before the tax.
B)  less than before the tax,and sellers effectively receive more than before the tax.
C)  more than before the tax,and sellers effectively receive less than before the tax.
D)  more than before the tax,and sellers effectively receive more than before the tax.E) None of the above
F) A) and B)

Question 9

A tax raises the price received by sellers and lowers the price paid by buyers.

Accepted Answer

A) True 
 B)False

Question 10

The benefit to buyers of participating in a market is measured by

Accepted Answer

A)  the price elasticity of demand.
B)  consumer surplus.
C)  the maximum amount that buyers are willing to pay for the good.
D)  the equilibrium price.E) B) and D)
F) None of the above

Question 11

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

Question 12

The view held by Arthur Laffer and Ronald Reagan that cuts in tax rates would encourage people to increase the quantity of labor they supplied became known as

Accepted Answer

A)  California economics.
B)  welfare economics.
C)  supply-side economics.
D)  elasticity economics.E) All of the above
F) A) and D)

Question 13

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

Question 14

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 15

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

Accepted Answer

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

Question 16

When a tax is imposed on sellers,consumer surplus and producer surplus both decrease.

Accepted Answer

A) True 
 B)False

Question 17

The higher a country's tax rates,the more likely that country will be

Accepted Answer

A)  at the top of the Laffer curve.
B)  on the positively sloped part of the Laffer curve.
C)  on the negatively sloped part of the Laffer curve.
D)  experiencing small deadweight losses.E) C) and D)
F) A) and D) C

Question 18

John has been in the habit of mowing Carl's lawn each week for 20 dinar.John's opportunity cost is 15 dinar,and Carl would be willing to pay 25 dinar to have his lawn mowed.What is the maximum tax the government can impose on lawn mowing without discouraging John and Carl from continuing their mutually beneficial arrangement?

Accepted Answer

If the tax is less than 10 dinar,there will exist a price at which both John and Carl will still benefit from the lawn-mowing arrangement.If the tax is 10 dinar,a price can be set which will leave John and Carl neither better off nor worse off from the lawn-mowing arrangement.If the tax is greater than 10 dinar,all possible prices will leave at least one of the parties worse off from the lawn-mowing arrangement.

Question 19

Economists disagree on whether labor taxes have a small or large deadweight loss.

Accepted Answer

A) True 
 B)False

Question 20

When a tax is imposed on buyers,consumer surplus and producer surplus both decrease.

Accepted Answer

A) True 
 B)False

Exam 8: Application: The Costs of Taxation

As the price elasticities of supply and demand increase,the deadweight loss from a tax increases.

Correct Answer
verified

Which of the following statements is correct regarding the imposition of a tax on gasoline?

Correct Answer
verified

The deadweight loss from a 3 pound tax will be largest in a market with

Correct Answer
verified

Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3.The price that buyers effectively pay after the tax is imposed is

Correct Answer
verified

The decrease in total surplus that results from a market distortion,such as a tax,is called a

Correct Answer
verified

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

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 consumer surplus is

Correct Answer
verified

When a tax is placed on the buyers of a product,a result is that buyers effectively pay

Correct Answer
verified

A tax raises the price received by sellers and lowers the price paid by buyers.

Correct Answer
verified

The benefit to buyers of participating in a market is measured by

Correct Answer
verified

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
verified

The view held by Arthur Laffer and Ronald Reagan that cuts in tax rates would encourage people to increase the quantity of labor they supplied became known as

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

Correct Answer
verified

When a tax is imposed on sellers,consumer surplus and producer surplus both decrease.

Correct Answer
verified

The higher a country's tax rates,the more likely that country will be

Correct Answer
verified
C

Economists disagree on whether labor taxes have a small or large deadweight loss.

Correct Answer
verified

When a tax is imposed on buyers,consumer surplus and producer surplus both decrease.

Correct Answer
verified

Exam 8: Application: The Costs of Taxation

As the price elasticities of supply and demand increase,the deadweight loss from a tax increases.

Correct AnswerverifiedShow Answer

Which of the following statements is correct regarding the imposition of a tax on gasoline?

Correct AnswerverifiedShow Answer

The deadweight loss from a 3 pound tax will be largest in a market with

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 price that buyers effectively pay after the tax is imposed is

Correct AnswerverifiedShow Answer

The decrease in total surplus that results from a market distortion,such as a tax,is called a

Correct AnswerverifiedShow Answer

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

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 consumer surplus is

Correct AnswerverifiedShow Answer

When a tax is placed on the buyers of a product,a result is that buyers effectively pay

Correct AnswerverifiedShow Answer

A tax raises the price received by sellers and lowers the price paid by buyers.

Correct AnswerverifiedShow Answer

The benefit to buyers of participating in a market is measured by

Correct AnswerverifiedShow 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

The view held by Arthur Laffer and Ronald Reagan that cuts in tax rates would encourage people to increase the quantity of labor they supplied became known as

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.The size of the tax 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 Answerverified11ea7a3f_c07e_6aa6_81a2_c526f4b6bea0_TB4793_00

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

Correct AnswerverifiedShow Answer

When a tax is imposed on sellers,consumer surplus and producer surplus both decrease.

Correct AnswerverifiedShow Answer

The higher a country's tax rates,the more likely that country will be

Correct AnswerverifiedC

Economists disagree on whether labor taxes have a small or large deadweight loss.

Correct AnswerverifiedShow Answer

When a tax is imposed on buyers,consumer surplus and producer surplus both decrease.

Correct AnswerverifiedShow Answer

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11ea7a3f_c07e_6aa6_81a2_c526f4b6bea0_TB4793_00

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C

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