Question 1

For a good that is taxed,the area on the relevant supply-and-demand graph that represents government's tax revenue is a

Accepted Answer

A)   triangle.
B)   rectangle.
C)   trapezoid.
D)   None of the above is correct;government's tax revenue is the area between the supply and demand curves,above the horizontal axis,and below the effective price to buyers.E) All of the above
F) A) and B)

Question 2

Scenario 8-2
Tom mows Stephanie's lawn for $25.Tom's opportunity cost of mowing Stephanie's lawn is $20,and Stephanie's willingness to pay Tom to mow her lawn is $28.
-Refer to Scenario 8-2.If Stephanie hires Tom to mow her lawn,Tom's producer surplus is

Accepted Answer

A)   $2.
B)   $3.
C)   $5.
D)   $25.E) A) and B)
F) None of the above

Question 3

The amount of deadweight loss from a tax depends upon the

Accepted Answer

A)   price elasticity of demand.
B)   price elasticity of supply.
C)   amount of the tax per unit.
D)   All of the above are correct.E) A) and B)
F) A) and C)

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 per-unit burden of the tax on sellers is

Accepted Answer

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

Question 5

Figure 8-5
Suppose that the government imposes a tax of P3 - P1. 
-Refer to Figure 8-5.After the tax is levied,consumer surplus is represented by area

Accepted Answer

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

Question 6

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

Accepted Answer

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

Question 7

Figure 8-7
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-7.Suppose a 20th unit of the good were sold by a seller to a buyer.Which of the following statements is correct?

Accepted Answer

A)   For the 20th unit,the difference between the buyer's value and the seller's cost is less than the tax per unit.
B)   For the 20th unit,the difference between the buyer's value and the seller's cost is greater than the tax per unit.
C)   For the 20th unit,the difference between the buyer's value and the seller's cost is equal to the tax per unit.
D)   It makes sense for the buyer to buy and for the seller to sell the 20th unit,with or without the tax in place.E) None of the above
F) A) and D)

Question 8

A tax on a good

Accepted Answer

A)   gives buyers an incentive to buy more of the good than they otherwise would buy.
B)   gives sellers an incentive to produce less of the good than they otherwise would produce.
C)   creates a benefit to the government,the size of which exceeds the loss in surplus to buyers and sellers.
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 9

Economists disagree on whether labor taxes cause small or large deadweight losses.This disagreement arises primarily because economists hold different views about

Accepted Answer

A)   the size of labor taxes.
B)   the importance of labor taxes imposed by the federal government relative to the importance of labor taxes imposed by the various states.
C)   the elasticity of labor supply.
D)   the elasticity of labor demand.E) B) and C)
F) C) and D)

Question 10

Suppose a tax of $5 per unit is imposed on a good.The supply curve is a typical upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.The tax decreases consumer surplus by $10,000 and decreases producer surplus by $15,000.The deadweight loss of the tax is $2,500.The tax decreased the equilibrium quantity of the good from

Accepted Answer

A)   6,500 to 5,500.
B)   5,500 to 4,500.
C)   5,000 to 3,000.
D)   6,000 to 4,000.E) A) and B)
F) None of the above

Question 11

One result of a tax,regardless of whether the tax is placed on the buyers or the sellers,is that the

Accepted Answer

A)   size of the market is unchanged.
B)   price the seller effectively receives is higher.
C)   supply curve for the good shifts upward by the amount of the tax.
D)   tax reduces the welfare of both buyers and sellers.E) B) and C)
F) C) and D)

Question 12

A deadweight loss is a consequence of a tax on a good because the tax

Accepted Answer

A)   induces the government to increase its expenditures.
B)   induces buyers to consume less,and sellers to produce less.
C)   increases the equilibrium price in the market.
D)   imposes a loss on buyers that is greater than the loss to sellers.E) A) and B)
F) B) and C)

Question 13

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

Accepted Answer

A)   J+K+L+M.
B)   J+K+L+M+N.
C)   I+Y.
D)   I+Y+B.E) C) and D)
F) None of the above

Question 14

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) A) and C)
F) None of the above

Question 15

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 16

Taxes on labor tend to increase the number of hours that people choose to work.

Accepted Answer

A) True 
 B)False

Question 17

Table 8-1
 
-Refer to Table 8-1.Suppose the government is considering levying a tax in one or more of the markets described in the table.Which of the markets will maximize the deadweight loss(es) from the tax?

Accepted Answer

A)   market B only
B)   markets A and C only
C)   markets B and D only
D)   market D onlyE) B) and C)
F) A) and B)

Question 18

Other things equal,the deadweight loss of a tax

Accepted Answer

A)   decreases as the size of the tax increases.
B)   increases as the size of the tax increases,but the increase in the deadweight loss is less rapid than the increase in the size of the tax.
C)   increases as the size of the tax increases,and the increase in the deadweight loss is more rapid than the increase in the size of the tax.
D)   increases as the price elasticities of demand and/or supply increase,but the deadweight loss does not change as the size of the tax increases.E) None of the above
F) B) and D)

Question 19

Figure 8-3
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-3.Which of the following equations is valid for the tax revenue that the tax provides to the government?

Accepted Answer

A)   Tax revenue = (P2 - P1) xQ1
B)   Tax revenue = (P3 - P1) xQ1
C)   Tax revenue = (P3 - P2) xQ1
D)   Tax revenue = (P3 - P1) x(Q2 - Q1) E) A) and D)
F) None of the above

Question 20

Figure 8-2
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-2.Total surplus without the tax is

Accepted Answer

A)   $10,and total surplus with the tax is $2.50.
B)   $10,and total surplus with the tax is $7.50.
C)   $20,and total surplus with the tax is $2.50.
D)   $20,and total surplus with the tax is $7.50.E) None of the above
F) A) and C)

Exam 8: Application: The Costs of Taxation

Taxes on labor tend to increase the number of hours that people choose to work.

Correct Answer
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Other things equal,the deadweight loss of a tax

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.Suppose a 20th unit of the good were sold by a seller to a buyer.Which of the following statements is correct?

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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A deadweight loss is a consequence of a tax on a good because the tax

Correct Answer
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The amount of deadweight loss from a tax depends upon the

Correct Answer
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One result of a tax,regardless of whether the tax is placed on the buyers or the sellers,is that the

Correct Answer
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Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.After the tax is levied,consumer surplus is represented by area

Correct Answer
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Scenario 8-2 Tom mows Stephanie's lawn for $25.Tom's opportunity cost of mowing Stephanie's lawn is $20,and Stephanie's willingness to pay Tom to mow her lawn is $28. -Refer to Scenario 8-2.If Stephanie hires Tom to mow her lawn,Tom's producer surplus 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.Total surplus without the tax is

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

Correct Answer
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Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3.The per-unit burden of the tax on sellers is

Correct Answer
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Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3.Which of the following equations is valid for the tax revenue that the tax provides to the government?

Correct Answer
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Table 8-1 -Refer to Table 8-1.Suppose the government is considering levying a tax in one or more of the markets described in the table.Which of the markets will maximize the deadweight loss(es) from the tax?

Correct Answer
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Economists disagree on whether labor taxes cause small or large deadweight losses.This disagreement arises primarily because economists hold different views about

Correct Answer
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Correct Answer
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For a good that is taxed,the area on the relevant supply-and-demand graph that represents government's tax revenue is a

Correct Answer
verified

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

Correct Answer
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A tax on a good

Correct Answer
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Exam 8: Application: The Costs of Taxation

Taxes on labor tend to increase the number of hours that people choose to work.

Correct AnswerverifiedShow Answer

Other things equal,the deadweight loss of a tax

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.Suppose a 20th unit of the good were sold by a seller to a buyer.Which of the following statements is correct?

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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

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A deadweight loss is a consequence of a tax on a good because the tax

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The amount of deadweight loss from a tax depends upon the

Correct AnswerverifiedShow Answer

One result of a tax,regardless of whether the tax is placed on the buyers or the sellers,is that the

Correct AnswerverifiedShow Answer

Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.After the tax is levied,consumer surplus is represented by area

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Scenario 8-2 Tom mows Stephanie's lawn for $25.Tom's opportunity cost of mowing Stephanie's lawn is $20,and Stephanie's willingness to pay Tom to mow her lawn is $28. -Refer to Scenario 8-2.If Stephanie hires Tom to mow her lawn,Tom's producer surplus is

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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.Total surplus without the tax is

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

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

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 per-unit burden of the tax on sellers is

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Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3.Which of the following equations is valid for the tax revenue that the tax provides to the government?

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Table 8-1 -Refer to Table 8-1.Suppose the government is considering levying a tax in one or more of the markets described in the table.Which of the markets will maximize the deadweight loss(es) from the tax?

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Economists disagree on whether labor taxes cause small or large deadweight losses.This disagreement arises primarily because economists hold different views about

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For a good that is taxed,the area on the relevant supply-and-demand graph that represents government's tax revenue is a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A tax on a good

Correct AnswerverifiedShow Answer

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