Question 1

Figure 8-1 
-Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by K+L represents

Accepted Answer

A)  tax revenue.
B)  consumer surplus before the tax.
C)  producer surplus after the tax.
D)  total surplus before the tax.E) B) and C)
F) All of the above

Question 2

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 deadweight loss as a result of the tax is

Accepted Answer

A)  $2.50.
B)  $5.
C)  $7.50.
D)  $10.E) A) and D)
F) A) and C)

Question 3

Figure 8-13 
-Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The tax causes the price received by sellers to

Accepted Answer

A)  decrease by $5.
B)  decrease by $3.
C)  decrease by $2.
D)  increase by $5.E) All of the above
F) None of the above

Question 4

Figure 8-25 
-Refer to Figure 8-25. Suppose the government places a $4 tax per unit on this good. How many units of this good will be bought and sold after the tax is imposed?

Accepted Answer

60 units will be bou...

Question 5

Figure 8-4
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-4. The equilibrium price before the tax is imposed is

Accepted Answer

A)  $12, and the equilibrium quantity is 35.
B)  $8, and the equilibrium quantity is 50.
C)  $5, and the equilibrium quantity is 35.
D)  $5, and the equilibrium quantity is 50.E) B) and D)
F) A) and B)

Question 6

Figure 8-22 
-Refer to Figure 8-22. Suppose the government initially imposes a $3 per-unit tax on this good. Now suppose the government is deciding whether to lower the tax to $1.50 or raise it to $4.50. Which of the following statements is not correct?

Accepted Answer

A)  Compared to the original tax, the larger tax will decrease 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) None of the above

Question 7

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 8

Figure 8-9
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-9. The per-unit burden of the tax on sellers is

Accepted Answer

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

Question 9

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

Question 10

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)  1/2 x (P5-0)  x Q5.
C)  (P8-0)  x Q2.
D)  1/2 x (P8-0)  x Q2.E) B) and D)
F) A) and B)

Question 11

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

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 equilibrium price and quantity before the imposition of the tax is

Accepted Answer

A)  P=$800 and Q=20.
B)  P=$600 and Q=20.
C)  P=$300 and Q=20.
D)  P=$600 and Q=40.E) B) and C)
F) All of the above

Question 13

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

Accepted Answer

A)  $35.
B)  $45.
C)  $70.
D)  $80.E) A) and C)
F) A) and D)

Question 14

Provide several examples of important taxes on labor in the United States. For a typical worker, what is the marginal tax rate on labor income once all the labor taxes are summed?

Accepted Answer

*the Social Security tax
*the ...

Question 15

Figure 8-1 
-Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by J+K+I represents

Accepted Answer

A)  consumer surplus after the tax.
B)  consumer surplus before the tax.
C)  producer surplus after the tax.
D)  producer surplus before the tax.E) None of the above
F) A) and D)

Question 16

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

Question 17

Tax revenue equals the size of the tax multiplied by the quantity sold in the market after the tax is levied.

Accepted Answer

A) True 
 B)False

Question 18

When a tax is imposed on buyers, consumer surplus decreases but producer surplus increases.

Accepted Answer

A) True 
 B)False

Question 19

The optimal tax is difficult to determine because although revenues rise and fall as the size of the tax increases, deadweight loss continues to increase.

Accepted Answer

A) True 
 B)False

Question 20

Figure 8-17 
-Refer to Figure 8-17. Suppose the government imposes a $1 tax in each of the four markets represented by demand curves D1, D2, D3, and D4. The deadweight will be the largest in the market represented by

Accepted Answer

A)  D1.
B)  D2.
C)  D3.
D)  D4.E) A) and D)
F) B) and C)

Exam 8: Application: The Costs of Taxation

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

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Figure 8-25 -Refer to Figure 8-25. Suppose the government places a $4 tax per unit on this good. How many units of this good will be bought and sold after the tax is imposed?

Correct Answerverified60 units will be bou...View AnswerShow Answer

Figure 8-9 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-9. The equilibrium price and quantity before the imposition of the tax is

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Figure 8-22 -Refer to Figure 8-22. Suppose the government initially imposes a $3 per-unit tax on this good. Now suppose the government is deciding whether to lower the tax to $1.50 or raise it to $4.50. Which of the following statements is not 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 amount of deadweight loss as a result of the tax is

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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 per-unit burden of the tax on sellers is

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Provide several examples of important taxes on labor in the United States. For a typical worker, what is the marginal tax rate on labor income once all the labor taxes are summed?

Correct Answerverified*the Social Security tax*the ...View AnswerShow 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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Tax revenue equals the size of the tax multiplied by the quantity sold in the market after the tax is levied.

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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

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The optimal tax is difficult to determine because although revenues rise and fall as the size of the tax increases, deadweight loss continues to increase.

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Figure 8-1 -Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by J+K+I represents

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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 tax causes the price received by sellers to

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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 equilibrium price before the tax is imposed is

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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

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Figure 8-1 -Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by K+L represents

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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.

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When a tax is imposed on buyers, consumer surplus decreases but producer surplus increases.

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

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Figure 8-17 -Refer to Figure 8-17. Suppose the government imposes a $1 tax in each of the four markets represented by demand curves D1, D2, D3, and D4. The deadweight will be the largest in the market represented by

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60 units will be bou...
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the Social Security tax
the ...
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