Question 1

When a tax is levied on a good, the buyers and sellers of the good share the burden,

Accepted Answer

A)  provided the tax is levied on the sellers.
B)  provided the tax is levied on the buyers.
C)  provided a portion of the tax is levied on the buyers, with the remaining portion levied on the sellers.
D)  regardless of how the tax is levied.E) A) and B)
F) B) and C)

Question 2

Figure 8-4
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-4. The amount of deadweight loss as a result of the tax is

Accepted Answer

A)  $105.
B)  $210.
C)  $490.
D)  $600.E) C) and D)
F) B) and C)

Question 3

In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue?

Accepted Answer

A)  The price elasticity of demand is small, and the price elasticity of supply is large.
B)  The price elasticity of demand is large, and the price elasticity of supply is small.
C)  The price elasticity of demand and the price elasticity of supply are both small.
D)  The price elasticity of demand and the price elasticity of supply are both large.E) B) and C)
F) All of the above

Question 4

Suppose that a university charges students a $100 "tax" to register for business classes. The next year the university raises the "tax" to $150. The deadweight loss from the "tax" triples.

Accepted Answer

A) True 
 B)False

Question 5

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 size of the tax is

Accepted Answer

A)  P0-P2.
B)  P2-P8.
C)  P2-P5.
D)  P5-P8.E) A) and D)
F) A) and B)

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 per-unit burden of the tax on sellers is

Accepted Answer

A)  $2.
B)  $3.
C)  $4.
D)  $5.E) B) and D)
F) A) and D)

Question 7

The size of the deadweight loss generated from a tax is affected by the

Accepted Answer

A)  elasticities of both supply and demand.
B)  elasticity of demand only.
C)  elasticity of supply only.
D)  total revenue collected by the government.E) B) and C)
F) A) and D)

Question 8

Figure 8-6
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-6. The amount of the tax on each unit of the good is

Accepted Answer

A)  $6.
B)  $8.
C)  $10.
D)  $12.E) A) and B)
F) C) and D)

Question 9

Figure 8-11 1 on the vertical axis represents the price A) received by sellers before the tax is imposed. B) received by sellers after the tax is imposed. C) paid by buyers before the tax is imposed. D) paid by buyers after the tax is imposed." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 8-11. The price labeled as P1 on the vertical axis represents the price

Accepted Answer

A)  received by sellers before the tax is imposed.
B)  received by sellers after the tax is imposed.
C)  paid by buyers before the tax is imposed.
D)  paid by buyers after the tax is imposed.E) A) and B)
F) A) and C)

Question 10

Figure 8-4
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-4. The tax results in a loss of consumer surplus that amounts to

Accepted Answer

A)  $120.
B)  $340.
C)  $450.
D)  $510.E) None of the above
F) B) and C)

Question 11

Figure 8-11 2 on the vertical axis represents the A) difference between the price paid by buyers after the tax is imposed and the price paid by buyers before the tax is imposed. B) difference between the price received by sellers before the tax is imposed and the price received by sellers after the tax is imposed. C) price of the good before the tax is imposed. D) price of the good after the tax is imposed." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 8-11. The price labeled as P2 on the vertical axis represents the

Accepted Answer

A)  difference between the price paid by buyers after the tax is imposed and the price paid by buyers before the tax is imposed.
B)  difference between the price received by sellers before the tax is imposed and the price received by sellers after the tax is imposed.
C)  price of the good before the tax is imposed.
D)  price of the good after the tax is imposed.E) A) and B)
F) A) and C)

Question 12

The more inelastic are demand and supply, the greater is the deadweight loss of a tax.

Accepted Answer

A) True 
 B)False

Question 13

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

Question 14

Figure 8-16 
-Refer to Figure 8-16. Suppose the government imposes a $1 tax in each of the four markets represented by supply curves S1, S2, S3, and S4. The deadweight will be the smallest in the market represented by

Accepted Answer

A)  S1.
B)  S2.
C)  S3.
D)  S4.E) All of the above
F) B) and C)

Question 15

If the size of a tax increases, tax revenue

Accepted Answer

A)  increases.
B)  decreases.
C)  remains the same.
D)  may increase, decrease, or remain the same.E) A) and C)
F) A) and B)

Question 16

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

Accepted Answer

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

Question 17

The benefit that government receives from a tax is measured by

Accepted Answer

A)  the change in the equilibrium quantity of the good.
B)  the change in the equilibrium price of the good.
C)  tax revenue.
D)  total surplus.E) B) and D)
F) C) and D)

Question 18

Taxes on labor encourage all of the following except

Accepted Answer

A)  older workers to take early retirement from the labor force.
B)  mothers to stay at home rather than work in the labor force.
C)  workers to work overtime.
D)  people to be paid "under the table."E) A) and C)
F) B) and C)

Question 19

When the government imposes taxes on buyers and sellers of a good, society loses some of the benefits of market efficiency.

Accepted Answer

A) True 
 B)False

Question 20

Table 8-1
   Marlet  Chareteristir  A  Denand is very elatic. B Denand is very inelastic. C Supply is vey elastic. D Supply is very inelatic. \begin{array} { | c | c | } \hline 	ext { Marlet } & 	ext { Chareteristir } \\hline 	ext { A } & 	ext { Denand is very elatic. } \\hline B & 	ext { Denand is very inelastic. } \\hline C & 	ext { Supply is vey elastic. } \\hline D & 	ext { Supply is very inelatic. } \\hline\end{array} Marlet  A BCD​ Chareteristir  Denand is very elatic.  Denand is very inelastic.  Supply is vey elastic.  Supply is very inelatic. ​​ 
-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 only E) A) and B)
F) A) and C)

Exam 8: Application: The Costs of Taxation

The more inelastic are demand and supply, the greater is the deadweight loss of a tax.

Correct Answer
verified

Suppose that a university charges students a $100 "tax" to register for business classes. The next year the university raises the "tax" to $150. The deadweight loss from the "tax" triples.

Correct Answer
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In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue?

Correct Answer
verified

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 tax results in a loss of consumer surplus that amounts to

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 amount of deadweight loss as a result of the tax is

Correct Answer
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Figure 8-16 -Refer to Figure 8-16. Suppose the government imposes a $1 tax in each of the four markets represented by supply curves S1, S2, S3, and S4. The deadweight will be the smallest in the market represented by

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 per-unit burden of the tax on sellers is

Correct Answer
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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
verified

When the government imposes taxes on buyers and sellers of a good, society loses some of the benefits of market efficiency.

Correct Answer
verified

Figure 8-11 -Refer to Figure 8-11. The price labeled as P₁ on the vertical axis represents the price

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. The amount of the tax on each unit of the good is

Correct Answer
verified

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

Correct Answer
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The size of the deadweight loss generated from a tax is affected by the

Correct Answer
verified

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 size of the tax is

Correct Answer
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If the size of a tax increases, tax revenue

Correct Answer
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Taxes on labor encourage all of the following except

Correct Answer
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When a tax is levied on a good, the buyers and sellers of the good share the burden,

Correct Answer
verified

Figure 8-11 -Refer to Figure 8-11. The price labeled as P₂ on the vertical axis represents the

Correct Answer
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The benefit that government receives from a tax is measured by

Correct Answer
verified

Exam 8: Application: The Costs of Taxation

The more inelastic are demand and supply, the greater is the deadweight loss of a tax.

Correct AnswerverifiedShow Answer

Suppose that a university charges students a $100 "tax" to register for business classes. The next year the university raises the "tax" to $150. The deadweight loss from the "tax" triples.

Correct AnswerverifiedShow Answer

In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue?

Correct AnswerverifiedShow Answer

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 tax results in a loss of consumer surplus that amounts to

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 amount of deadweight loss as a result of the tax is

Correct AnswerverifiedShow Answer

Figure 8-16 -Refer to Figure 8-16. Suppose the government imposes a $1 tax in each of the four markets represented by supply curves S1, S2, S3, and S4. The deadweight will be the smallest in the market represented by

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 per-unit burden of the tax on sellers is

Correct AnswerverifiedShow Answer

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

When the government imposes taxes on buyers and sellers of a good, society loses some of the benefits of market efficiency.

Correct AnswerverifiedShow Answer

Figure 8-11 -Refer to Figure 8-11. The price labeled as P1 on the vertical axis represents the price

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. The amount of the tax on each unit of the good is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The size of the deadweight loss generated from a tax is affected by the

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 size of the tax is

Correct AnswerverifiedShow Answer

If the size of a tax increases, tax revenue

Correct AnswerverifiedShow Answer

Taxes on labor encourage all of the following except

Correct AnswerverifiedShow Answer

When a tax is levied on a good, the buyers and sellers of the good share the burden,

Correct AnswerverifiedShow Answer

Figure 8-11 -Refer to Figure 8-11. The price labeled as P2 on the vertical axis represents the

Correct AnswerverifiedShow Answer

The benefit that government receives from a tax is measured by

Correct AnswerverifiedShow Answer

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Figure 8-11 -Refer to Figure 8-11. The price labeled as P₁ on the vertical axis represents the price

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Figure 8-11 -Refer to Figure 8-11. The price labeled as P₂ on the vertical axis represents the

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