Question 1

Figure 8-11  
-Refer to Figure 8-11. The tax revenue that the government collects equals

Accepted Answer

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

Question 2

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

Accepted Answer

A) K+L. 
B) I+Y. 
C) J+K+L+M. 
D) I+J+K+L+M+Y. 
A) K+L. 
B) I+Y. 
C) J+K+L+M. 
D) I+J+K+L+M+Y.

Question 3

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

Accepted Answer

A) I+Y. 
B) J+K+L+M. 
C) L+M+Y. 
D) I+J+K+L+M+Y. 
A) I+Y. 
B) J+K+L+M. 
C) L+M+Y. 
D) I+J+K+L+M+Y.

Question 4

Scenario 8-3
Suppose the market demand and market supply curves are given by the equations:  
-Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes:   
How much tax revenue will be collected after this tax is imposed?

Accepted Answer

The tax re

Question 5

Tom walks Bethany's dog once a day for $50 per week. Bethany values this service at $60 per week, while the opportunity cost of Tom's time is $30 per week. The government places a tax of $35 per week on dog walkers. After the tax, what is the loss in total surplus?

Accepted Answer

A) $50 
B) $30 
C) $25 
D) $0 
A) $50 
B) $30 
C) $25 
D) $0

Question 6

Concerning the labor market and taxes on labor, economists disagree about

Accepted Answer

A) the size of the tax on labor. 
B) the size of the deadweight loss of the tax on labor. 
C) whether or not a tax on labor places a wedge between the wage that firms pay and the wage that workers receive. 
D) All of the above are correct. 
A) the size of the tax on labor. 
B) the size of the deadweight loss of the tax on labor. 
C) whether or not a tax on labor places a wedge between the wage that firms pay and the wage that workers receive. 
D) All of the above are correct.

Question 7

Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.  
-Refer to Figure 8-8. The deadweight loss of the tax is the area

Accepted Answer

A) B+D. 
B) C+F. 
C) A+C+F+J. 
D) B+C+D+F. 
A) B+D. 
B) C+F. 
C) A+C+F+J. 
D) B+C+D+F.

Question 8

When a tax is levied on the buyers of a good, the

Accepted Answer

A) supply curve shifts upward by the amount of the tax. 
B) quantity supplied increases for all conceivable prices of the good. 
C) buyers of the good will send tax payments to the government. 
D) demand curve shifts to the right by the horizontal distance of the tax. 
A) supply curve shifts upward by the amount of the tax. 
B) quantity supplied increases for all conceivable prices of the good. 
C) buyers of the good will send tax payments to the government. 
D) demand curve shifts to the right by the horizontal distance of the tax.

Question 9

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 10

A tax is imposed on a certain good. The tax produces revenue of $5,000 for the government. The tax reduces consumer surplus by $3,000 and it reduces producer surplus by $4,000. What is the amount of the deadweight loss of the tax?

Accepted Answer

The deadweight loss

Question 11

Consider a good to which a per-unit tax applies. The size of the deadweight that results from the tax is smaller, the

Accepted Answer

A) larger is the price elasticity of demand. 
B) smaller is the price elasticity of supply. 
C) larger is the amount of the tax. 
D) All of the above are correct. 
A) larger is the price elasticity of demand. 
B) smaller is the price elasticity of supply. 
C) larger is the amount of the tax. 
D) All of the above are correct.

Question 12

Figure 8-5
Suppose that the government imposes a tax of P3 - P1.  
-Refer to Figure 8-5. The price that buyers effectively pay after the tax is imposed is

Accepted Answer

A) P1. 
B) P2. 
C) P3. 
D) P4. 
A) P1. 
B) P2. 
C) P3. 
D) P4.

Question 13

A tax on a good

Accepted Answer

A) raises the price that buyers effectively pay and raises the price that sellers effectively receive. 
B) raises the price that buyers effectively pay and lowers the price that sellers effectively receive. 
C) lowers the price that buyers effectively pay and raises the price that sellers effectively receive. 
D) lowers the price that buyers effectively pay and lowers the price that sellers effectively receive. 
A) raises the price that buyers effectively pay and raises the price that sellers effectively receive. 
B) raises the price that buyers effectively pay and lowers the price that sellers effectively receive. 
C) lowers the price that buyers effectively pay and raises the price that sellers effectively receive. 
D) lowers the price that buyers effectively pay and lowers the price that sellers effectively receive.

Question 14

Sellers of a product will bear the larger part of the tax burden, and buyers will bear a smaller part of the tax burden, when the

Accepted Answer

A) tax is placed on the sellers of the product. 
B) tax is placed on the buyers of the product. 
C) supply of the product is more elastic than the demand for the product. 
D) demand for the product is more elastic than the supply of the product. 
A) tax is placed on the sellers of the product. 
B) tax is placed on the buyers of the product. 
C) supply of the product is more elastic than the demand for the product. 
D) demand for the product is more elastic than the supply of the product.

Question 15

The demand for bread is less elastic than the demand for donuts; hence, a tax on bread will create a larger deadweight loss than will the same tax on donuts, other things equal.

Accepted Answer

A) True 
 B)False

Question 16

Figure 8-12  
-Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The loss of producer surplus resulting from this tax is

Accepted Answer

A) $5.50. 
B) $17.50. 
C) $22.50. 
D) $45.00 
A) $5.50. 
B) $17.50. 
C) $22.50. 
D) $45.00

Question 17

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 price that sellers receive is

Accepted Answer

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

Question 18

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

Accepted Answer

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

Question 19

Figure 8-21  
-Refer to Figure 8-21. Suppose the government places a $3 per-unit tax on this good. The largest deadweight loss from the tax would occur in a market where demand is represented by

Accepted Answer

A) Demand 1, and supply is represented by Supply 1. 
B) Demand 1, and supply is represented by Supply 2. 
C) Demand 2, and supply is represented by Supply 1. 
D) Demand 2, and supply is represented by Supply 2. 
A) Demand 1, and supply is represented by Supply 1. 
B) Demand 1, and supply is represented by Supply 2. 
C) Demand 2, and supply is represented by Supply 1. 
D) Demand 2, and supply is represented by Supply 2.

Question 20

Figure 8-2
The vertical distance between points A and B represents a tax in the market.  
-Refer to Figure 8-2. The amount of tax revenue received by the government is

Accepted Answer

A) $2.50. 
B) $4. 
C) $5. 
D) $9. 
A) $2.50. 
B) $4. 
C) $5. 
D) $9.

Exam 8: Applications: the Costs of Taxation

Figure 8-11 -Refer to Figure 8-11. The tax revenue that the government collects equals

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

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

Scenario 8-3 Suppose the market demand and market supply curves are given by the equations: -Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes: How much tax revenue will be collected after this tax is imposed?

Tom walks Bethany's dog once a day for $50 per week. Bethany values this service at $60 per week, while the opportunity cost of Tom's time is $30 per week. The government places a tax of $35 per week on dog walkers. After the tax, what is the loss in total surplus?

Concerning the labor market and taxes on labor, economists disagree about

Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. -Refer to Figure 8-8. The deadweight loss of the tax is the area

When a tax is levied on the buyers of a good, the

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

A tax is imposed on a certain good. The tax produces revenue of $5,000 for the government. The tax reduces consumer surplus by $3,000 and it reduces producer surplus by $4,000. What is the amount of the deadweight loss of the tax?

Consider a good to which a per-unit tax applies. The size of the deadweight that results from the tax is smaller, the

Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5. The price that buyers effectively pay after the tax is imposed is

A tax on a good

Sellers of a product will bear the larger part of the tax burden, and buyers will bear a smaller part of the tax burden, when the

The demand for bread is less elastic than the demand for donuts; hence, a tax on bread will create a larger deadweight loss than will the same tax on donuts, other things equal.

Figure 8-12 -Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The loss of producer surplus resulting from this tax is

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 price that sellers receive is

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

Figure 8-21 -Refer to Figure 8-21. Suppose the government places a $3 per-unit tax on this good. The largest deadweight loss from the tax would occur in a market where demand is represented by

Figure 8-2 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-2. The amount of tax revenue received by the government is

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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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