Exam 7: Taxation and Government Intervention

Refer to the graph shown. Assume that the market is initially in equilibrium at a price of $6 and a quantity of 40 units. If the government imposes a $2 per-unit tax on this product, it will collect tax revenue in the amount of:

Refer to the graph shown. If the price were somehow held at $8.15 per unit, producer surplus would then equal:

Taxes:

Refer to the graph shown. In equilibrium, consumer surplus is equal to:

A per-unit tax on coffee paid by the seller causes the:

Refer to the graph shown. Total surplus is maximized when:

When supply and demand are both elastic, a price floor will cause a:

Refer to the graph shown. If price is increased from $3 to $4, consumer surplus will fall by:

Suppose that 75 percent of a cigarette tax is borne by consumers. If the supply elasticity is 1, the demand elasticity is equal to:

When the United States imposed a tariff on imported shrimp, a Vietnamese official said: "If the tariffs are imposed, that will mean fewer shrimp for the U.S. market and higher prices for consumers. So the U.S. government position hurts its own people. That's irrational." The imposition of tariffs by the United States in this case illustrates:

Refer to the graph shown. If the price were at the market equilibrium price, the total surplus would be the combination of the areas:

The more elastic the supply and the demand curves are, the:

Refer to the graph shown. Assume the market is initially in equilibrium at point b in the graph but the imposition of a per-unit tax on this product shifts the supply curve up from S₀ to S₁. The effect of the tax is to raise equilibrium price from:

Refer to the graph shown. An effective price ceiling at Pc imposes a deadweight loss shown by:

The price of gasoline is generally higher in Hawaii than in the continental United States. Therefore, the Hawaiian legislature passed a law forbidding gas stations from charging a price higher than the average price of gas on the West Coast of the United States. This is an example of:

Refer to the graph shown. With an effective price ceiling at Pc, the quantity supplied:

Refer to the graph shown. Initially, the market is in equilibrium with price equal to $12 and quantity equal to 140. As a result of a per-unit tax imposed by the government, the supply curve shifts from S₀ to S₁. The effect of the tax is to:

Refer to the graphs shown. The most tax revenue collected by a given per-unit tax on producers is shown by graphs:

If elasticity of demand is 0.7, elasticity of supply is 0.7, and a 5 percent excise tax is levied on the good:

The problems created by price controls become greatest as time goes by when: