Question 1

Figure 8-13 
-Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The amount of tax revenue collected by the government is

Accepted Answer

A)   $120.
B)   $80.
C)   $50.
D)   $30.E) B) and C)
F) B) and D)

Question 2

In 2012, in The Wall Street Journal, economists Edward Prescott and Lee Ohanian asserted that

Accepted Answer

A)   in the United States, when the average worker earns $100 from additional work, he or she will be able to consume an additional $85 worth of goods and services.
B)   the typical American has always worked more hours per year than the typical Frenchman and the typical German, despite vastly different tax rates in those countries.
C)   raising tax rates from their 2012 levels would significantly reduce U.S. economic activity.
D)   raising tax rates from their 2012 levels would significantly increase the federal government's tax revenue.E) B) and C)
F) A) and C)

Question 3

Figure 8-25 
-Refer to Figure 8-25. How much is consumer surplus at the market equilibrium?

Accepted Answer

Consumer s...

Question 4

What happens to the total surplus in a market when the government imposes a tax?

Accepted Answer

A)   Total surplus increases by the amount of the tax.
B)   Total surplus increases but by less than the amount of the tax.
C)   Total surplus decreases.
D)   Total surplus is unaffected by the tax.E) A) and C)
F) A) and B)

Question 5

Figure 8-26 
-Refer to Figure 8-26. How much is producer surplus at the market equilibrium?

Accepted Answer

Producer surplus is ...

Question 6

Figure 8-3
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-3. The amount of tax revenue received by the government is equal to the area

Accepted Answer

A)   P3ACP1.
B)   ABC.
C)   P2DAP3.
D)   P1CDP2.E) All of the above
F) A) and D)

Question 7

Suppose the federal government doubles the gasoline tax. The deadweight loss associated with the tax

Accepted Answer

A)   also doubles.
B)   triples.
C)   quadruples.
D)   rises by a factor of 8.E) None of the above
F) A) and D)

Question 8

Figure 8-12 
-Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The tax causes the price received by sellers to

Accepted Answer

A)   decrease by $3.
B)   increase by $2.
C)   decrease by $1.
D)   increase by $6.E) A) and D)
F) C) and D)

Question 9

In 2012, in The Wall Street Journal, economists Peter Diamond and Emmanuel Saez wrote that, according to their analysis, the federal government's tax revenue would be maximized if the marginal income tax rate on individuals with the highest earnings were in or near the range of

Accepted Answer

A)   10 percent to 30 percent.
B)   30 percent to 50 percent.
C)   50 percent to 70 percent.
D)   70 percent to 90 percent.E) C) and D)
F) A) and B)

Question 10

Figure 8-6
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-6. When the tax is imposed in this market, the price buyers effectively pay is

Accepted Answer

A)   $4.
B)   $6.
C)   $10.
D)   $16.E) A) and D)
F) C) and D)

Question 11

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 12

If the size of a tax triples, the deadweight loss increases by a factor of six.

Accepted Answer

A) True 
 B)False

Question 13

Figure 8-26 
-Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. How much is producer surplus after the tax is imposed?

Accepted Answer

Producer surplus is ...

Question 14

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

Question 15

Figure 8-1 
-Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by J 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) A) and B)
F) None of the above

Question 16

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

Question 17

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 B)
F) A) and C)

Question 18

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 C)

Question 19

The supply curve for motor oil is the typical upward-sloping straight line, and the demand curve for motor oil is the typical downward-sloping straight line. When motor oil is taxed, the area on the relevant supply-and-demand graph that represents the deadweight loss is

Accepted Answer

A)   larger than the area that represents consumer surplus in the absence of the tax.
B)   larger than the area that represents government's tax revenue.
C)   a triangle.
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 8: Application: the Costs of Taxation

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

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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.

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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 tax is imposed in this market, the price buyers effectively pay 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. The loss of producer surplus as a result of the tax is

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Figure 8-25 -Refer to Figure 8-25. How much is consumer surplus at the market equilibrium?

Correct AnswerverifiedConsumer s...View AnswerShow Answer

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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Figure 8-26 -Refer to Figure 8-26. How much is producer surplus at the market equilibrium?

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In 2012, in The Wall Street Journal, economists Edward Prescott and Lee Ohanian asserted that

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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 8-1 -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

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What happens to the total surplus in a market when the government imposes a tax?

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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 amount of tax revenue received by the government is equal to the area

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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 amount of tax revenue collected by the government is

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

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If the size of a tax triples, the deadweight loss increases by a factor of six.

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Figure 8-26 -Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. How much is producer surplus after the tax is imposed?

Correct AnswerverifiedProducer surplus is ...View AnswerShow Answer

Figure 8-12 -Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The tax causes the price received by sellers to

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The supply curve for motor oil is the typical upward-sloping straight line, and the demand curve for motor oil is the typical downward-sloping straight line. When motor oil is taxed, the area on the relevant supply-and-demand graph that represents the deadweight loss is

Correct AnswerverifiedShow Answer

Suppose the federal government doubles the gasoline tax. The deadweight loss associated with the tax

Correct AnswerverifiedShow Answer

In 2012, in The Wall Street Journal, economists Peter Diamond and Emmanuel Saez wrote that, according to their analysis, the federal government's tax revenue would be maximized if the marginal income tax rate on individuals with the highest earnings were in or near the range of

Correct AnswerverifiedShow Answer

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Consumer s...
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Producer surplus is ...
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Producer surplus is ...
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