Question 1

Refer to the graph shown. With an effective price floor at Pf, total surplus is reduced by:

Accepted Answer

A)  rectangles B and C. 
B)  rectangles A and D. 
C)  triangles E and F. 
D)  rectangle B and triangle E. 
A)  rectangles B and C. 
B)  rectangles A and D. 
C)  triangles E and F. 
D)  rectangle B and triangle E.

Question 2

Refer to the graph shown. When the market is in equilibrium, producer surplus is equal to:

Accepted Answer

A)  250. 
B)  500. 
C)  750. 
D)  1,000. 
A)  250. 
B)  500. 
C)  750. 
D)  1,000.

Question 3

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 lost consumer surplus of this tax is equal to the area:

Accepted Answer

A)  P1(P2 − t)ab. 
B)  P2P1bc. 
C)  cab. 
D)  cdb. 
A)  P1(P2 − t)ab. 
B)  P2P1bc. 
C)  cab. 
D)  cdb.

Question 4

Refer to the graph shown. Assume the market is initially in equilibrium at point j 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:

Accepted Answer

A)  d to b. 
B)  d to c. 
C)  c to b. 
D)  e to c. 
A)  d to b. 
B)  d to c. 
C)  c to b. 
D)  e to c.

Question 5

Refer to the graph shown. Assume that the market is initially in equilibrium at a price of $10 and a quantity of 500 units. If the government imposes a $4 per-unit tax on this product, equilibrium quantity will change to:

Accepted Answer

A)  300. 
B)  400. 
C)  500. 
D)  1,000. 
A)  300. 
B)  400. 
C)  500. 
D)  1,000.

Question 6

Refer to the graph shown. Initially, the market is in equilibrium with price equal to $25 and quantity equal to 100. 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:

Accepted Answer

A)  raise the price consumers pay from $25 to $30. 
B)  lower the price consumers pay from $25 to $15. 
C)  raise the price sellers keep after paying the tax from $25 to $30. 
D)  lower the price sellers keep after paying the tax from $25 to $20. 
A)  raise the price consumers pay from $25 to $30. 
B)  lower the price consumers pay from $25 to $15. 
C)  raise the price sellers keep after paying the tax from $25 to $30. 
D)  lower the price sellers keep after paying the tax from $25 to $20.

Question 7

Refer to the graphs shown. Deadweight loss is the least with the imposition of a given per-unit tax on producers in graphs:

Accepted Answer

A)  A and D. 
B)  B and C. 
C)  C and D. 
D)  B and D. 
A)  A and D. 
B)  B and C. 
C)  C and D. 
D)  B and D.

Question 8

Refer to the graph shown. When market supply shifts from S0 to S1, the revenue loss to suppliers resulting from the lower price is shown by area:

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 9

Refer to the graph shown. If consumers had to pay $13 per unit for this product instead of $10 per unit, consumer surplus would fall from:

Accepted Answer

A)  2,250 to 1,125. 
B)  1,125 to 810. 
C)  1,500 to 810. 
D)  1,125 to 405. 
A)  2,250 to 1,125. 
B)  1,125 to 810. 
C)  1,500 to 810. 
D)  1,125 to 405.

Question 10

Refer to the graph shown. With an effective price floor at $8, total surplus is reduced by:

Accepted Answer

A)  25. 
B)  45. 
C)  90. 
D)  100. 
A)  25. 
B)  45. 
C)  90. 
D)  100.

Question 11

Refer to the graph shown. Assume that the market is initially in equilibrium at a price of $10 and a quantity of 500 units. If the government imposes a $4 per-unit tax on this product, the deadweight loss from the tax will be:

Accepted Answer

A)  200. 
B)  400. 
C)  1,600. 
D)  1,800. 
A)  200. 
B)  400. 
C)  1,600. 
D)  1,800.

Question 12

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 welfare loss triangle from this tax is represented by area:

Accepted Answer

A)  cfg. 
B)  beg. 
C)  abc. 
D)  abdc. 
A)  cfg. 
B)  beg. 
C)  abc. 
D)  abdc.

Question 13

If demand is perfectly inelastic, the burden of a tax on suppliers is borne:

Accepted Answer

A)  entirely by the suppliers. 
B)  entirely by the consumers. 
C)  mostly by the suppliers and partly by the consumers if the demand curve is inelastic. 
D)  partly by the suppliers and mostly by the consumers if the demand curve is elastic. 
A)  entirely by the suppliers. 
B)  entirely by the consumers. 
C)  mostly by the suppliers and partly by the consumers if the demand curve is inelastic. 
D)  partly by the suppliers and mostly by the consumers if the demand curve is elastic.

Question 14

Refer to the graphs shown. The burden of the tax is borne entirely by consumers in graphs:

Accepted Answer

A)  A and D. 
B)  B and C. 
C)  C and D. 
D)  B and D. 
A)  A and D. 
B)  B and C. 
C)  C and D. 
D)  B and D.

Question 15

Given the same price elasticity of supply, sellers would be able to pass along the smallest portion of a 10 percent tax on which item?

Accepted Answer

A)  Beef with a price elasticity of demand of 0.62 
B)  Pork with a price elasticity of demand of 0.73 
C)  Chicken with a price elasticity of demand of 0.32 
D)  Fish with a price elasticity of demand of 0.12 
A)  Beef with a price elasticity of demand of 0.62 
B)  Pork with a price elasticity of demand of 0.73 
C)  Chicken with a price elasticity of demand of 0.32 
D)  Fish with a price elasticity of demand of 0.12

Question 16

Refer to the graph shown. If the government imposed a price ceiling of $4, the quantity purchased by consumers in this market would:

Accepted Answer

A)  decline from 6 to 4. 
B)  decline from 4 to 2. 
C)  increase from 2 to 4. 
D)  increase from 4 to 6. 
A)  decline from 6 to 4. 
B)  decline from 4 to 2. 
C)  increase from 2 to 4. 
D)  increase from 4 to 6.

Question 17

If the demand for Insulin is highly inelastic, the burden of a tax on Insulin will be borne almost entirely by sellers.

Accepted Answer

A) True 
 B)False

Question 18

Refer to the graph shown. An effective price ceiling at Pc causes producer surplus to:

Accepted Answer

A)  change from areas C + D + F to areas B + C + D. 
B)  change from areas A + B + E to areas A + B + C. 
C)  fall from areas C + D + F to area D. 
D)  fall from areas A + B + E to area A. 
A)  change from areas C + D + F to areas B + C + D. 
B)  change from areas A + B + E to areas A + B + C. 
C)  fall from areas C + D + F to area D. 
D)  fall from areas A + B + E to area A.

Question 19

The total cost of taxation to consumers and producers generally exceeds the amount of tax revenue collected by government.

Accepted Answer

A) True 
 B)False

Question 20

Given the same price elasticity of supply, sellers would be able to pass along the largest portion of a 10 percent tax on which item?

Accepted Answer

A)  Beef with a price elasticity of demand of 0.62 
B)  Pork with a price elasticity of demand of 0.73 
C)  Chicken with a price elasticity of demand of 0.32 
D)  D.Fish with a price elasticity of demand of 0.12 
A)  Beef with a price elasticity of demand of 0.62 
B)  Pork with a price elasticity of demand of 0.73 
C)  Chicken with a price elasticity of demand of 0.32 
D)  D.Fish with a price elasticity of demand of 0.12

Exam 7: Taxation and Government Intervention

Refer to the graph shown. With an effective price floor at Pf, total surplus is reduced by:

Refer to the graph shown. When the market is in equilibrium, producer surplus is equal to:

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 lost consumer surplus of this tax is equal to the area:

Refer to the graph shown. Assume the market is initially in equilibrium at point j 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. Assume that the market is initially in equilibrium at a price of $10 and a quantity of 500 units. If the government imposes a $4 per-unit tax on this product, equilibrium quantity will change to:

Refer to the graph shown. Initially, the market is in equilibrium with price equal to $25 and quantity equal to 100. 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. Deadweight loss is the least with the imposition of a given per-unit tax on producers in graphs:

Refer to the graph shown. When market supply shifts from S0 to S1, the revenue loss to suppliers resulting from the lower price is shown by area:

Refer to the graph shown. If consumers had to pay $13 per unit for this product instead of $10 per unit, consumer surplus would fall from:

Refer to the graph shown. With an effective price floor at $8, total surplus is reduced by:

Refer to the graph shown. Assume that the market is initially in equilibrium at a price of $10 and a quantity of 500 units. If the government imposes a $4 per-unit tax on this product, the deadweight loss from the tax will be:

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 welfare loss triangle from this tax is represented by area:

If demand is perfectly inelastic, the burden of a tax on suppliers is borne:

Refer to the graphs shown. The burden of the tax is borne entirely by consumers in graphs:

Given the same price elasticity of supply, sellers would be able to pass along the smallest portion of a 10 percent tax on which item?

Refer to the graph shown. If the government imposed a price ceiling of $4, the quantity purchased by consumers in this market would:

If the demand for Insulin is highly inelastic, the burden of a tax on Insulin will be borne almost entirely by sellers.

Refer to the graph shown. An effective price ceiling at Pc causes producer surplus to:

The total cost of taxation to consumers and producers generally exceeds the amount of tax revenue collected by government.

Given the same price elasticity of supply, sellers would be able to pass along the largest portion of a 10 percent tax on which item?

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters

Refer to the graph shown. With an effective price floor at P_f, total surplus is reduced by:

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 lost consumer surplus of this tax is equal to the area:

Refer to the graph shown. Assume the market is initially in equilibrium at point j 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. Initially, the market is in equilibrium with price equal to $25 and quantity equal to 100. 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 graph shown. When market supply shifts from S₀ to S₁, the revenue loss to suppliers resulting from the lower price is shown by area:

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 welfare loss triangle from this tax is represented by area: