Question 1

The benefit to buyers of participating in a market is measured by

Accepted Answer

A) consumer surplus. 
B) producer surplus. 
C) total surplus. 
D) deadweight loss. 
A) consumer surplus. 
B) producer surplus. 
C) total surplus. 
D) deadweight loss.

Question 2

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

Accepted Answer

Consumer surplus is

Question 3

Figure 8-9
The vertical distance between points A and C represents a tax in the market.  
-Refer to Figure 8-9. The consumer surplus without the tax is

Accepted Answer

A) $2,000. 
B) $5,000. 
C) $8,000. 
D) $16,000. 
A) $2,000. 
B) $5,000. 
C) $8,000. 
D) $16,000.

Question 4

Figure 8-19
The vertical distance between points A and B represents the original tax.  
-Refer to Figure 8-19. If the government changed the per-unit tax from $5.00 to $2.50, then the price paid by buyers would be $7.50, the price received by sellers would be $5, and the quantity sold in the market would be 1.5 units. Compared to the original tax rate, this lower tax rate would

Accepted Answer

A) increase government revenue and increase the deadweight loss from the tax. 
B) increase government revenue and decrease the deadweight loss from the tax. 
C) decrease government revenue and increase the deadweight loss from the tax. 
D) decrease government revenue and decrease the deadweight loss from the tax. 
A) increase government revenue and increase the deadweight loss from the tax. 
B) increase government revenue and decrease the deadweight loss from the tax. 
C) decrease government revenue and increase the deadweight loss from the tax. 
D) decrease government revenue and decrease the deadweight loss from the tax.

Question 5

The loss in total surplus resulting from a tax is called

Accepted Answer

A) a deficit. 
B) economic loss. 
C) deadweight loss. 
D) inefficiency. 
A) a deficit. 
B) economic loss. 
C) deadweight loss. 
D) inefficiency.

Question 6

Figure 8-7
The vertical distance between points A and B represents a tax in the market.  
-Refer to Figure 8-7. Which of the following statements is correct?

Accepted Answer

A) Total surplus before the tax is imposed is $500. 
B) After the tax is imposed, consumer surplus is 45 percent of its pre-tax value. 
C) After the tax is imposed, producer surplus is 45 percent of its pre-tax value. 
D) All of the above are correct. 
A) Total surplus before the tax is imposed is $500. 
B) After the tax is imposed, consumer surplus is 45 percent of its pre-tax value. 
C) After the tax is imposed, producer surplus is 45 percent of its pre-tax value. 
D) All of the above are correct.

Question 7

The Social Security tax is a labor tax.

Accepted Answer

A) True 
 B)False

Question 8

If the labor supply curve is nearly vertical, a tax on labor

Accepted Answer

A) has a large deadweight loss. 
B) raises a small amount of tax revenue. 
C) has little impact on the amount of work that workers are willing to do. 
D) results in a large tax burden on the firms that hire labor. 
A) has a large deadweight loss. 
B) raises a small amount of tax revenue. 
C) has little impact on the amount of work that workers are willing to do. 
D) results in a large tax burden on the firms that hire labor.

Question 9

Figure 8-9
The vertical distance between points A and C represents a tax in the market.  
-Refer to Figure 8-9. The total surplus without the tax is

Accepted Answer

A) $8,000. 
B) $12,000. 
C) $20,000. 
D) $40,000. 
A) $8,000. 
B) $12,000. 
C) $20,000. 
D) $40,000.

Question 10

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

Accepted Answer

A) $20. 
B) $200. 
C) $300. 
D) $500. 
A) $20. 
B) $200. 
C) $300. 
D) $500.

Question 11

Figure 8-6
The vertical distance between points A and B represents a tax in the market.  
-Refer to Figure 8-6. Without a tax, producer surplus in this market is

Accepted Answer

A) $1,500. 
B) $2,400. 
C) $3,000. 
D) $3,600. 
A) $1,500. 
B) $2,400. 
C) $3,000. 
D) $3,600.

Question 12

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) $105. 
B) $140. 
C) $170. 
D) $210. 
A) $105. 
B) $140. 
C) $170. 
D) $210.

Question 13

Illustrate on three demand-and-supply graphs how the size of a tax (small, medium and large) can alter total revenue and deadweight loss.

Accepted Answer

The answer of Illustrate on three demand-and-supply graphs how the...

Question 14

Deadweight loss measures the loss

Accepted Answer

A) in a market to buyers and sellers that is not offset by an increase in government revenue. 
B) in revenue to the government when buyers choose to buy less of the product because of the tax. 
C) of equality in a market due to government intervention. 
D) of total revenue to business firms due to the price wedge caused by the tax. 
A) in a market to buyers and sellers that is not offset by an increase in government revenue. 
B) in revenue to the government when buyers choose to buy less of the product because of the tax. 
C) of equality in a market due to government intervention. 
D) of total revenue to business firms due to the price wedge caused by the tax.

Question 15

Figure 8-22  
-Refer to Figure 8-22. Suppose the government changed the per-unit tax on this good from $3.00 to $1.50. Compared to the original tax rate, this lower tax rate would

Accepted Answer

A) increase tax revenue and increase the deadweight loss from the tax. 
B) increase tax revenue and decrease the deadweight loss from the tax. 
C) decrease tax revenue and increase the deadweight loss from the tax. 
D) decrease tax revenue and decrease the deadweight loss from the tax. 
A) increase tax revenue and increase the deadweight loss from the tax. 
B) increase tax revenue and decrease the deadweight loss from the tax. 
C) decrease tax revenue and increase the deadweight loss from the tax. 
D) decrease tax revenue and decrease the deadweight loss from the tax.

Question 16

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. 
A) P0-P2. 
B) P2-P8. 
C) P2-P5. 
D) P5-P8.

Question 17

When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic.

Accepted Answer

A) True 
 B)False

Question 18

Figure 8-24. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax.  
-Refer to Figure 8-24. Tax revenue would

Accepted Answer

A) decrease if the economy began at point B and then the tax rate was decreased. 
B) increase if the economy began at point F and then the tax rate was decreased. 
C) decrease if the economy began at point C and then the tax rate was increased. 
D) All of the above are correct. 
A) decrease if the economy began at point B and then the tax rate was decreased. 
B) increase if the economy began at point F and then the tax rate was decreased. 
C) decrease if the economy began at point C and then the tax rate was increased. 
D) All of the above are correct.

Question 19

Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.  
-Refer to Figure 8-8. One effect of the tax is to

Accepted Answer

A) reduce consumer surplus from $180 to $72. 
B) reduce producer surplus from $96 to $24. 
C) create a deadweight loss of $72. 
D) All of the above are correct. 
A) reduce consumer surplus from $180 to $72. 
B) reduce producer surplus from $96 to $24. 
C) create a deadweight loss of $72. 
D) All of the above are correct.

Question 20

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

Accepted Answer

A) total surplus before the tax. 
B) total surplus after the tax. 
C) consumer surplus before the tax. 
D) deadweight loss from the tax. 
A) total surplus before the tax. 
B) total surplus after the tax. 
C) consumer surplus before the tax. 
D) deadweight loss from the tax.

Exam 8: Application: The Costs of Taxation

The benefit to buyers of participating in a market is measured by

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

Figure 8-9 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-9. The consumer surplus without the tax is

The loss in total surplus resulting from a tax is called

Figure 8-7 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-7. Which of the following statements is correct?

The Social Security tax is a labor tax.

If the labor supply curve is nearly vertical, a tax on labor

Figure 8-9 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-9. The total surplus without the tax is

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

Figure 8-6 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-6. Without a tax, producer surplus in this market is

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

Illustrate on three demand-and-supply graphs how the size of a tax (small, medium and large) can alter total revenue and deadweight loss.

Deadweight loss measures the loss

Figure 8-22 -Refer to Figure 8-22. Suppose the government changed the per-unit tax on this good from $3.00 to $1.50. Compared to the original tax rate, this lower tax rate would

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

When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic.

Figure 8-24. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. -Refer to Figure 8-24. Tax revenue would

Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. -Refer to Figure 8-8. One effect of the tax is to

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

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters