Question 1

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

Accepted Answer

A)  supply curve shifts upward by the amount of the tax.
B)  quantity demanded decreases for all conceivable prices of the good.
C)  quantity supplied increases for all conceivable prices of the good.
D)  None of the above is correct.E) A) and B)
F) A) and C)

Question 2

Buyers of a product will bear the larger part of the tax burden, and sellers will bear a smaller part of the tax burden, when the

Accepted Answer

A)  tax is placed on the sellers of the product.
B)  tax is placed on the buyers of the product.
C)  supply of the product is more elastic than the demand for the product.
D)  demand for the product is more elastic than the supply of the product.E) None of the above
F) All of the above

Question 3

Figure 8-4
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-4. The per-unit burden of the tax on buyers is

Accepted Answer

A)  $3.
B)  $4.
C)  $5.
D)  $8.E) B) and C)
F) None of the above

Question 4

If the tax on a good is doubled, the deadweight loss of the tax

Accepted Answer

A)  increases by 50 percent.
B)  doubles.
C)  triples.
D)  quadruples.E) None of the above
F) A) and C)

Question 5

Figure 8-12 
-Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The amount of deadweight loss resulting from this tax is

Accepted Answer

A)  $7.50.
B)  $15.00.
C)  $22.50.
D)  $45.00.E) A) and D)
F) B) and C)

Question 6

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 as a result of the tax is

Accepted Answer

A)  $1.
B)  $2.
C)  $3.
D)  $4.E) C) and D)
F) B) and D)

Question 7

Which of the following would likely have the smallest deadweight loss relative to the tax revenue?

Accepted Answer

A)  a head tax (that is, a tax everyone must pay regardless of what one does or buys) 
B)  an income tax
C)  a tax on compact discs
D)  a tax on caviarE) All of the above
F) A) and D)

Question 8

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

Accepted Answer

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

Question 9

Suppose Rebecca needs a dog sitter so that she can travel to her sister's wedding. Rebecca values dog sitting for the weekend at $200. Susan is willing to dog sit for Rebecca so long as she receives at least $150. Rebecca and Susan agree on a price of $175. Suppose the government imposes a tax of $10 on dog sitting. The tax has made Rebecca and Susan worse off by a total of

Accepted Answer

A)  $50.
B)  $40.
C)  $20.
D)  $10.E) B) and C)
F) A) and D)

Question 10

Figure 8-9
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-9. The imposition of the tax causes the price received by sellers to decrease by

Accepted Answer

A)  $20.
B)  $200.
C)  $300.
D)  $500.E) A) and B)
F) B) and C)

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. The tax revenue is

Accepted Answer

A)  (P0-P2)  x Q2.
B)  (P2-P8)  x Q2.
C)  (P2-P5)  x Q5.
D)  (P5-P8)  x Q5.E) A) and B)
F) A) and C)

Question 12

Figure 8-12 
-Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The amount of tax revenue collected by the government is

Accepted Answer

A)  $7.50.
B)  $15.00.
C)  $22.50.
D)  $45.00.E) A) and D)
F) None of the above

Question 13

Figure 8-26 
-Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. What price will consumers pay for the good after the tax is imposed?

Accepted Answer

Consumers will pay $...

Question 14

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

Accepted Answer

A)  consumer surplus.
B)  producer surplus.
C)  total surplus.
D)  deadweight loss.E) C) and D)
F) B) and D)

Question 15

Figure 8-8
Suppose the government imposes a $10 per unit tax on a good. 
-Refer to Figure 8-8. The government collects tax revenue that is the area

Accepted Answer

A)  L.
B)  B+D.
C)  C+F.
D)  F+G+L.E) B) and C)
F) None of the above

Question 16

Suppose a tax of $4 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 2,000 units to 1,700 units. The tax decreases consumer surplus by $3,000 and decreases producer surplus by $4,400. The deadweight loss of the tax is

Accepted Answer

A)  $200.
B)  $400.
C)  $600.
D)  $1,200.E) A) and B)
F) A) and C)

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

Question 18

As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on, the

Accepted Answer

A)  tax revenue increases at first, but it eventually peaks and then decreases.
B)  deadweight loss increases at first, but it eventually peaks and then decreases.
C)  tax revenue always increases, and the deadweight loss always increases.
D)  tax revenue always decreases, and the deadweight loss always increases.E) B) and D)
F) A) and D)

Question 19

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) None of the above

Question 20

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

Exam 8: Applications: the Costs of Taxation

Suppose a tax of $4 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 2,000 units to 1,700 units. The tax decreases consumer surplus by $3,000 and decreases producer surplus by $4,400. The deadweight loss of the tax is

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 imposition of the tax causes the quantity sold to

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. The tax revenue is

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 loss of producer surplus as a result of the tax is

Correct Answer
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Figure 8-1 -Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The consumer surplus after the tax is measured by the area

Correct Answer
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Buyers of a product will bear the larger part of the tax burden, and sellers will bear a smaller part of the tax burden, when the

Correct Answer
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As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on, the

Correct Answer
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Figure 8-12 -Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The amount of deadweight loss resulting from this tax is

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 imposition of the tax causes the price received by sellers to decrease by

Correct Answer
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Figure 8-26 -Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. What price will consumers pay for the good after the tax is imposed?

Correct Answer
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Consumers will pay $...
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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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Figure 8-12 -Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The amount of tax revenue collected by the government is

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
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If the tax on a good is doubled, the deadweight loss of the tax

Correct Answer
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Figure 8-4 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-4. The per-unit burden of the tax on buyers is

Correct Answer
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Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. -Refer to Figure 8-8. The government collects tax revenue that is the area

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Which of the following would likely have the smallest deadweight loss relative to the tax revenue?

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Exam 8: Applications: the Costs of Taxation

Suppose a tax of $4 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 2,000 units to 1,700 units. The tax decreases consumer surplus by $3,000 and decreases producer surplus by $4,400. The deadweight loss 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. The imposition of the tax causes the quantity sold to

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 tax revenue 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. The loss of producer surplus as a result of the tax is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Buyers of a product will bear the larger part of the tax burden, and sellers will bear a smaller part of the tax burden, when the

Correct AnswerverifiedShow Answer

As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on, the

Correct AnswerverifiedShow Answer

Figure 8-12 -Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The amount of deadweight loss resulting from this tax is

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 imposition of the tax causes the price received by sellers to decrease by

Correct AnswerverifiedShow Answer

Figure 8-26 -Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. What price will consumers pay for the good after the tax is imposed?

Correct AnswerverifiedConsumers will pay $...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

Figure 8-12 -Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The amount of tax revenue collected by the government is

Correct AnswerverifiedShow Answer

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

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

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

Correct AnswerverifiedShow Answer

If the tax on a good is doubled, the deadweight loss of the tax

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 per-unit burden of the tax on buyers is

Correct AnswerverifiedShow Answer

Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. -Refer to Figure 8-8. The government collects tax revenue that is the area

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following would likely have the smallest deadweight loss relative to the tax revenue?

Correct AnswerverifiedShow Answer

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Consumers will pay $...
View Answer

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