Question 1

The elasticities of the supply and demand curves in the market for cigarettes affect how much a tax distorts that market.

Accepted Answer

A) True 
 B)False

Question 2

Figure 8-3 
-Refer to Figure 8-3.Suppose the government increases the size of the tax on this good from $4 per unit to $6 per unit.Will the tax revenue collected from the tax increase,decrease,or stay the same?

Accepted Answer

Total tax ...

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 C)
F) A) and D)

Question 4

The Social Security tax,and to a large extent,the federal income tax,are labor taxes.

Accepted Answer

A) True 
 B)False

Question 5

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) All of the above
F) A) and B)

Question 6

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) All of the above
F) A) and B)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Andre walks Julia's dog once a day for $50 per week.Julia values this service at $60 per week,while the opportunity cost of Andre's time is $30 per week.The government places a tax of $35 per week on dog walkers.After the tax,what is the total surplus?

Accepted Answer

A)   $50
B)   $30
C)   $25
D)   $0E) A) and D)
F) None of the above

Question 9

Figure 8-12 
-Refer to Figure 8-12.Which of the following statements is correct?

Accepted Answer

A)   Supply 1 is more elastic than supply 2.
B)   Demand 2 is more elastic than demand 1.
C)   Demand 1 is more elastic than supply 1.
D)   All of the above are correct.E) None of the above
F) B) and C)

Question 10

Figure 8-5
Suppose that the government imposes a tax of P3 - P1. 
-Refer to Figure 8-5.The tax causes a reduction in consumer surplus that is represented by area

Accepted Answer

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

Question 11

Deadweight loss is the

Accepted Answer

A)   decline in total surplus that results from a tax.
B)   decline in government revenue when taxes are reduced in a market.
C)   decline in consumer surplus when a tax is placed on buyers.
D)   loss of profits to business firms when a tax is imposed.E) A) and B)
F) A) and C)

Question 12

Figure 8-19.The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. 
-Refer to Figure 8-19.The curve that is shown on the figure is called the

Accepted Answer

A)   deadweight-loss curve.
B)   tax-incidence curve.
C)   Laffer curve.
D)   Lorenz curve.E) A) and D)
F) None of the above

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) C) and D)

Question 14

When a tax is imposed,the loss of consumer surplus and producer surplus as a result of the tax exceeds the tax revenue collected by the government.

Accepted Answer

A) True 
 B)False

Question 15

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.Without 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) B) and C)
F) A) and D)

Question 16

It does not matter whether a tax is levied on the buyers or the sellers of a good because

Accepted Answer

A)   sellers always bear the full burden of the tax.
B)   buyers always bear the full burden of the tax.
C)   buyers and sellers will share the burden of the tax.
D)   None of the above is correct;the incidence of the tax does depend on whether the buyers or the sellers are required to pay the tax.E) None of the above
F) A) and C)

Question 17

Figure 8-5
Suppose that the government imposes a tax of P3 - P1. 
-Refer to Figure 8-5.The total surplus with the tax is represented by area

Accepted Answer

A)   C+H.
B)   A+B+C.
C)   D+H+F.
D)   A+B+D+F.E) A) and D)
F) All of the above

Question 18

Figure 8-2
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-2.The amount of the tax on each unit of the good is

Accepted Answer

A)   $1.
B)   $4.
C)   $5.
D)   $9.E) B) and C)
F) A) and B)

Question 19

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 not correct?

Accepted Answer

A)   Compared to the original tax,the larger tax will increase tax revenue.
B)   Compared to the original tax,the smaller tax will decrease deadweight loss.
C)   Compared to the original tax,the smaller tax will decrease tax revenue.
D)   Compared to the original tax,the larger tax will increase deadweight loss.E) All of the above
F) A) and C)

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

Exam 8: Application: The Costs of Taxation

When a tax is imposed,the loss of consumer surplus and producer surplus as a result of the tax exceeds the tax revenue collected by the government.

Correct Answer
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The Social Security tax,and to a large extent,the federal income tax,are labor taxes.

Correct Answer
verified

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

Correct Answer
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Andre walks Julia's dog once a day for $50 per week.Julia values this service at $60 per week,while the opportunity cost of Andre's time is $30 per week.The government places a tax of $35 per week on dog walkers.After the tax,what is the total surplus?

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 amount of the tax on each unit of the good is

Correct Answer
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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.Without the tax,the producer surplus is

Correct Answer
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It does not matter whether a tax is levied on the buyers or the sellers of a good because

Correct Answer
verified

Figure 8-19.The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. -Refer to Figure 8-19.The curve that is shown on the figure is called the

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

Correct Answer
verified

Correct Answer
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The elasticities of the supply and demand curves in the market for cigarettes affect how much a tax distorts that market.

Correct Answer
verified

Figure 8-3 -Refer to Figure 8-3.Suppose the government increases the size of the tax on this good from $4 per unit to $6 per unit.Will the tax revenue collected from the tax increase,decrease,or stay the same?

Correct Answer
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Total tax ...
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Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.The tax causes a reduction in consumer surplus that is represented by area

Correct Answer
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Figure 8-12 -Refer to Figure 8-12.Which of the following statements is correct?

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 total surplus with the tax is represented by area

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

Correct Answer
verified

Deadweight loss is the

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 imposed in this market,the price sellers effectively receive is

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

Correct Answer
verified

Exam 8: Application: The Costs of Taxation

When a tax is imposed,the loss of consumer surplus and producer surplus as a result of the tax exceeds the tax revenue collected by the government.

Correct AnswerverifiedShow Answer

The Social Security tax,and to a large extent,the federal income tax,are labor taxes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Andre walks Julia's dog once a day for $50 per week.Julia values this service at $60 per week,while the opportunity cost of Andre's time is $30 per week.The government places a tax of $35 per week on dog walkers.After the tax,what is the total surplus?

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 amount of the tax on each unit of the good 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.Without the tax,the producer surplus is

Correct AnswerverifiedShow Answer

It does not matter whether a tax is levied on the buyers or the sellers of a good because

Correct AnswerverifiedShow Answer

Figure 8-19.The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. -Refer to Figure 8-19.The curve that is shown on the figure is called the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The elasticities of the supply and demand curves in the market for cigarettes affect how much a tax distorts that market.

Correct AnswerverifiedShow Answer

Figure 8-3 -Refer to Figure 8-3.Suppose the government increases the size of the tax on this good from $4 per unit to $6 per unit.Will the tax revenue collected from the tax increase,decrease,or stay the same?

Correct AnswerverifiedTotal tax ...View AnswerShow Answer

Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.The tax causes a reduction in consumer surplus that is represented by area

Correct AnswerverifiedShow Answer

Figure 8-12 -Refer to Figure 8-12.Which of the following statements is correct?

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Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.The total surplus with the tax is represented by area

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

Deadweight loss is the

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 8-6 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

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

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Total tax ...
View Answer

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