Question 1

Scenario 8-3
Suppose the market demand and market supply curves are given by the equations: 
-Refer to Scenario 8-3. What are the equilibrium price and equilibrium quantity in this market?

Accepted Answer

The equilibrium pric...

Question 2

Figure 8-13 
-Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The amount of tax revenue collected by the government is

Accepted Answer

A)  $120.
B)  $80.
C)  $50.
D)  $30.E) A) and D)
F) B) and D)

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 government imposes the tax in this market, tax revenue is

Accepted Answer

A)  $600.
B)  $900.
C)  $1,500.
D)  $3,000.E) A) and B)
F) A) and D)

Question 4

Figure 8-5
Suppose that the government imposes a tax of P3 - P1. 
-Refer to Figure 8-5. The benefit to the government is measured by

Accepted Answer

A)  tax revenue and is represented by area A+B.
B)  tax revenue and is represented by area B+D.
C)  the net gain in total surplus and is represented by area B+D.
D)  the net gain in total surplus and is represented by area C+H.E) B) and C)
F) None of the above

Question 5

Which of the following ideas is the most plausible?

Accepted Answer

A)  Reducing a high tax rate is less likely to increase tax revenue than is reducing a low tax rate.
B)  Reducing a high tax rate is more likely to increase tax revenue than is reducing a low tax rate.
C)  Reducing a high tax rate will have the same effect on tax revenue as reducing a low tax rate.
D)  Reducing a tax rate can never increase tax revenue.E) B) and D)
F) B) and C)

Question 6

Figure 8-25 
-Refer to Figure 8-25. Suppose the government places a $4 tax per unit on this good. How much is total surplus after the tax is imposed?

Accepted Answer

Total surp...

Question 7

Relative to a situation in which gasoline is not taxed, the imposition of a tax on gasoline causes the quantity of gasoline demanded to

Accepted Answer

A)  decrease and the quantity of gasoline supplied to decrease.
B)  decrease and the quantity of gasoline supplied to increase.
C)  increase and the quantity of gasoline supplied to decrease.
D)  increase and the quantity of gasoline supplied to increase.E) B) and C)
F) All of the above

Question 8

Figure 8-26 
-Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. How much is total surplus after the tax is imposed?

Accepted Answer

Total surplus is the sum of co...

Question 9

Which of the following statements is correct regarding a tax on a good and the resulting deadweight loss?

Accepted Answer

A)  The greater are the price elasticities of supply and demand, the greater is the deadweight loss.
B)  The greater is the price elasticity of supply and the smaller is the price elasticity of demand, the greater is the deadweight loss.
C)  The smaller are the decreases in quantity demanded and quantity supplied, the greater the deadweight loss.
D)  The smaller is the wedge between the effective price to sellers and the effective price to buyers, the greater is the deadweight loss.E) B) and C)
F) None of the above

Question 10

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 250 per month when there is no tax. Then a tax of $6 per widget is imposed. As a result, the government is able to raise $750 per month in tax revenue. We can conclude that the after-tax quantity of widgets is

Accepted Answer

A)  75 per month.
B)  100 per month.
C)  125 per month.
D)  150 per month.E) All of the above
F) B) and D)

Question 11

The less freedom people are given to choose the date of their retirement, the

Accepted Answer

A)  more elastic is the supply of labor.
B)  less elastic is the supply of labor.
C)  flatter is the labor supply curve.
D)  smaller is the decrease in employment that will result from a tax on labor.E) A) and B)
F) A) and C)

Question 12

Figure 8-9
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-9. The amount of tax revenue received by the government is

Accepted Answer

A)  $4,000.
B)  $6,000.
C)  $10,000.
D)  $24,000.E) B) and C)
F) A) and D)

Question 13

Figure 8-11 1 on the vertical axis represents the price 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." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 8-11. The price labeled as P1 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) C) and D)
F) A) and D)

Question 14

Economists generally agree that the most important tax in the U.S. economy is the

Accepted Answer

A)  investment tax.
B)  sales tax.
C)  property tax.
D)  labor tax.E) A) and B)
F) C) and D)

Question 15

A tax affects

Accepted Answer

A)  buyers only.
B)  sellers only.
C)  buyers and sellers only.
D)  buyers, sellers, and the government.E) B) and C)
F) None of the above

Question 16

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 17

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 consumer surplus for those buyers of the good who continue to buy it after the tax is imposed is

Accepted Answer

A)  $0.
B)  $1.50.
C)  $3.
D)  $4.50.E) None of the above
F) B) and D)

Question 18

Suppose the tax on gasoline is decreased from $0.60 per gallon to $0.40 per gallon. As a result,

Accepted Answer

A)  tax revenue necessarily decreases.
B)  the deadweight loss of the tax necessarily decreases.
C)  the demand curve for gasoline necessarily becomes steeper.
D)  the supply curve for gasoline necessarily becomes flatter.E) None of the above
F) A) and D)

Question 19

Figure 8-7
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-7. Which of the following statements summarizes the incidence of the tax?

Accepted Answer

A)  For each unit of the good that is sold, buyers bear one-half of the tax burden, and sellers bear one-half of the tax burden.
B)  For each unit of the good that is sold, buyers bear one-third of the tax burden, and sellers bear two-thirds of the tax burden.
C)  For each unit of the good that is sold, buyers bear one-fourth of the tax burden, and sellers bear three-fourths of the tax burden.
D)  For each unit of the good that is sold, buyers bear three-fourths of the tax burden, and sellers bear one-fourth of the tax burden.E) B) and D)
F) B) and C)

Question 20

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

Exam 8: Application: The Costs of Taxation

Figure 8-25 -Refer to Figure 8-25. Suppose the government places a $4 tax per unit on this good. How much is total surplus after the tax is imposed?

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Total surp...
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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 consumer surplus for those buyers of the good who continue to buy it after the tax is imposed is

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Figure 8-26 -Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. How much is total surplus after the tax is imposed?

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Total surplus is the sum of co...
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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 government imposes the tax in this market, tax revenue is

Correct Answer
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Relative to a situation in which gasoline is not taxed, the imposition of a tax on gasoline causes the quantity of gasoline demanded to

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 benefit to the government is measured by

Correct Answer
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Figure 8-7 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-7. Which of the following statements summarizes the incidence of the tax?

Correct Answer
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Which of the following statements is correct regarding a tax on a good and the resulting deadweight loss?

Correct Answer
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Economists generally agree that the most important tax in the U.S. economy is the

Correct Answer
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The less freedom people are given to choose the date of their retirement, the

Correct Answer
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Suppose the tax on gasoline is decreased from $0.60 per gallon to $0.40 per gallon. As a result,

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?

Correct Answer
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The deadweight loss ...
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Scenario 8-3 Suppose the market demand and market supply curves are given by the equations: -Refer to Scenario 8-3. What are the equilibrium price and equilibrium quantity in this market?

Correct Answer
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The equilibrium pric...
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Figure 8-13 -Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The amount of tax revenue collected by the government is

Correct Answer
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Which of the following ideas is the most plausible?

Correct Answer
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Figure 8-9 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-9. The amount of tax revenue received by the government is

Correct Answer
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A tax affects

Correct Answer
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Figure 8-11 -Refer to Figure 8-11. The price labeled as P₁ on the vertical axis represents the price

Correct Answer
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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
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Exam 8: Application: The Costs of Taxation

Figure 8-25 -Refer to Figure 8-25. Suppose the government places a $4 tax per unit on this good. How much is total surplus after the tax is imposed?

Correct AnswerverifiedTotal surp...View AnswerShow 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 consumer surplus for those buyers of the good who continue to buy it after the tax is imposed is

Correct AnswerverifiedShow Answer

Figure 8-26 -Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. How much is total surplus after the tax is imposed?

Correct AnswerverifiedTotal surplus is the sum of co...View AnswerShow 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 government imposes the tax in this market, tax revenue is

Correct AnswerverifiedShow Answer

Relative to a situation in which gasoline is not taxed, the imposition of a tax on gasoline causes the quantity of gasoline demanded to

Correct AnswerverifiedShow Answer

Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5. The benefit to the government is measured by

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. Which of the following statements summarizes the incidence of the tax?

Correct AnswerverifiedShow Answer

Which of the following statements is correct regarding a tax on a good and the resulting deadweight loss?

Correct AnswerverifiedShow Answer

Economists generally agree that the most important tax in the U.S. economy is the

Correct AnswerverifiedShow Answer

The less freedom people are given to choose the date of their retirement, the

Correct AnswerverifiedShow Answer

Suppose the tax on gasoline is decreased from $0.60 per gallon to $0.40 per gallon. As a result,

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

Scenario 8-3 Suppose the market demand and market supply curves are given by the equations: -Refer to Scenario 8-3. What are the equilibrium price and equilibrium quantity in this market?

Correct AnswerverifiedThe equilibrium pric...View AnswerShow Answer

Figure 8-13 -Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The amount of tax revenue collected by the government is

Correct AnswerverifiedShow Answer

Which of the following ideas is the most plausible?

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 amount of tax revenue received by the government is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A tax affects

Correct AnswerverifiedShow Answer

Figure 8-11 -Refer to Figure 8-11. The price labeled as P1 on the vertical axis represents the price

Correct AnswerverifiedShow Answer

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

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Total surp...
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Total surplus is the sum of co...
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The deadweight loss ...
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The equilibrium pric...
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Figure 8-11 -Refer to Figure 8-11. The price labeled as P₁ on the vertical axis represents the price

Correct Answer
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