Question 1

A tax on insulin is likely to cause a very large deadweight loss to society.

Accepted Answer

A) True 
 B)False

Question 2

Figure 8-11 
-Refer to Figure 8-11.The length of the line segment connecting points A and B represents

Accepted Answer

A)   the difference between the price paid by buyers after the tax is imposed and the price received by sellers after the tax is imposed.
B)   the size of the tax.
C)   the "tax wedge."
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 3

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

Accepted Answer

A)   $8,000.
B)   $12,000.
C)   $20,000.
D)   $40,000.E) A) and D)
F) None of the above

Question 4

The government's benefit from a tax can be measured by

Accepted Answer

A)   consumer surplus.
B)   producer surplus.
C)   tax revenue.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 5

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) B) and D)
F) None of the above

Question 6

If a tax shifts the demand curve downward (or to the left) ,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) B) and C)
F) None of the above

Question 7

If a tax did not induce buyers or sellers to change their behavior,it would not cause a deadweight loss.

Accepted Answer

A) True 
 B)False

Question 8

When a tax is imposed on a good,consumer surplus decreases and producer surplus remains unchanged.

Accepted Answer

A) True 
 B)False

Question 9

When a tax is imposed on the buyers of a good,the demand curve shifts

Accepted Answer

A)   downward by the amount of the tax.
B)   upward by the amount of the tax.
C)   downward by less than the amount of the tax.
D)   upward by more than the amount of the tax.E) All of the above
F) A) and D)

Question 10

When a tax is levied on the buyers of a good,the

Accepted Answer

A)   supply curve shifts upward by the amount of the tax.
B)   quantity supplied increases for all conceivable prices of the good.
C)   buyers of the good will send tax payments to the government.
D)   demand curve shifts to the right by the horizontal distance of the tax.E) B) and D)
F) All of the above

Question 11

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

Accepted Answer

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

Question 12

Taxes on labor tend to encourage the elderly to retire early.

Accepted Answer

A) True 
 B)False

Question 13

Figure 8-17
The vertical distance between points A and B represents the original tax. 
-Refer to Figure 8-17.If the government changed the per-unit tax from $5.00 to $7.50,then the price paid by buyers would be $10.50,the price received by sellers would be $3,and the quantity sold in the market would be 0.5 units.Compared to the original tax rate,this higher tax rate would

Accepted Answer

A)   increase government revenue and increase the deadweight loss from the tax.
B)   increase government revenue and decrease the deadweight loss from the tax.
C)   decrease government revenue and increase the deadweight loss from the tax.
D)   decrease government revenue and decrease the deadweight loss from the tax.E) B) and C)
F) A) and B)

Question 14

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.Before the tax,what is the total surplus?

Accepted Answer

A)   $60
B)   $50
C)   $30
D)   $25E) A) and C)
F) A) and D)

Question 15

Figure 8-11 
-Refer to Figure 8-11.The deadweight loss of the tax is represented by the

Accepted Answer

A)   length of the line segment connecting points A and B.
B)   length of the line segment connecting points A and C.
C)   length of the line segment connecting points B and C.
D)   area of the triangle bounded by the points A,B,and C.E) A) and B)
F) B) and C)

Question 16

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

Question 17

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,consumer surplus decreases by

Accepted Answer

A)   $65,producer surplus decreases by $85,tax revenue is $120,and deadweight loss is $30.
B)   $75,producer surplus decreases by $75,tax revenue is $120,and deadweight loss is $30.
C)   $80,producer surplus decreases by $80,tax revenue is $120,and deadweight loss is $40.
D)   $120,producer surplus decreases by $120,tax revenue is $200,and deadweight loss is $40.E) All of the above
F) B) and C)

Question 18

Figure 8-13  
-Refer to Figure 8-13.Panel (a) and Panel (b) each illustrate a $4 tax placed on a market.In comparison to Panel (a) ,Panel (b) illustrates which of the following statements?

Accepted Answer

A)   When demand is relatively inelastic,the deadweight loss of a tax is smaller than when demand is relatively elastic.
B)   When demand is relatively elastic,the deadweight loss of a tax is larger than when demand is relatively inelastic.
C)   When supply is relatively inelastic,the deadweight loss of a tax is smaller than when supply is relatively elastic.
D)   When supply is relatively elastic,the deadweight loss of a tax is larger than when supply is relatively inelastic.E) A) and B)
F) All of the above

Question 19

Economists use the government's tax revenue to measure the public benefit from a tax.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 8: Application: the Costs of Taxation

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

Correct Answer
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Correct Answer
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Figure 8-11 -Refer to Figure 8-11.The deadweight loss of the tax is represented by the

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 total surplus without the tax is

Correct Answer
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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

When a tax is imposed on the buyers of a good,the demand curve shifts

Correct Answer
verified

When a tax is imposed on a good,consumer surplus decreases and producer surplus remains unchanged.

Correct Answer
verified

When a tax is levied on the buyers of a good,the

Correct Answer
verified

The government's benefit from a tax can be measured by

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,consumer surplus decreases by

Correct Answer
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Correct Answer
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If a tax did not induce buyers or sellers to change their behavior,it would not cause a deadweight loss.

Correct Answer
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Taxes on labor tend to encourage the elderly to retire early.

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.Before the tax,what is the total surplus?

Correct Answer
verified

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

Correct Answer
verified

Figure 8-11 -Refer to Figure 8-11.The length of the line segment connecting points A and B represents

Correct Answer
verified

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

Correct Answer
verified

Economists use the government's tax revenue to measure the public benefit from a tax.

Correct Answer
verified

A tax on insulin is likely to cause a very large deadweight loss to society.

Correct Answer
verified

Figure 8-13 -Refer to Figure 8-13.Panel (a) and Panel (b) each illustrate a $4 tax placed on a market.In comparison to Panel (a) ,Panel (b) illustrates which of the following statements?

Correct Answer
verified

Exam 8: Application: the Costs of Taxation

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 8-11 -Refer to Figure 8-11.The deadweight loss of the tax is represented by the

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 total surplus without the tax is

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

When a tax is imposed on the buyers of a good,the demand curve shifts

Correct AnswerverifiedShow Answer

When a tax is imposed on a good,consumer surplus decreases and producer surplus remains unchanged.

Correct AnswerverifiedShow Answer

When a tax is levied on the buyers of a good,the

Correct AnswerverifiedShow Answer

The government's benefit from a tax can be 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.As a result of the tax,consumer surplus decreases by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a tax did not induce buyers or sellers to change their behavior,it would not cause a deadweight loss.

Correct AnswerverifiedShow Answer

Taxes on labor tend to encourage the elderly to retire early.

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.Before the tax,what is the total surplus?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 8-11 -Refer to Figure 8-11.The length of the line segment connecting points A and B represents

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Economists use the government's tax revenue to measure the public benefit from a tax.

Correct AnswerverifiedShow Answer

A tax on insulin is likely to cause a very large deadweight loss to society.

Correct AnswerverifiedShow Answer

Figure 8-13 -Refer to Figure 8-13.Panel (a) and Panel (b) each illustrate a $4 tax placed on a market.In comparison to Panel (a) ,Panel (b) illustrates which of the following statements?

Correct AnswerverifiedShow Answer

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