Question 1

Taxes on labor encourage which of the following?

Accepted Answer

A) Labor demand to be more inelastic 
B) Mothers to stay at home rather than work in the labor force 
C) Workers to work overtime 
D) Fathers to take on second jobs 
A) Labor demand to be more inelastic 
B) Mothers to stay at home rather than work in the labor force 
C) Workers to work overtime 
D) Fathers to take on second jobs

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

In which of the following instances would the deadweight loss of the tax on airline tickets increase by a factor of 9?

Accepted Answer

A) The tax on airline tickets increases from $20 per ticket to $60 per ticket. 
B) The tax on airline tickets increases from $20 per ticket to $90 per ticket. 
C) The tax on airline tickets increases from $15 per ticket to $60 per ticket. 
D) The tax on airline tickets increases from $15 per ticket to $135 per ticket. 
A) The tax on airline tickets increases from $20 per ticket to $60 per ticket. 
B) The tax on airline tickets increases from $20 per ticket to $90 per ticket. 
C) The tax on airline tickets increases from $15 per ticket to $60 per ticket. 
D) The tax on airline tickets increases from $15 per ticket to $135 per ticket.

Question 4

Figure 8-2
The vertical distance between points C and D represents a tax in the market.
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-Refer to Figure 8-2. Consumer surplus without the tax is

Accepted Answer

A) $24, and consumer surplus with the tax is $6. 
B) $6, and consumer surplus with the tax is $24. 
C) $16, and consumer surplus with the tax is $4. 
D) $4, and consumer surplus with the tax is $16. 
A) $24, and consumer surplus with the tax is $6. 
B) $6, and consumer surplus with the tax is $24. 
C) $16, and consumer surplus with the tax is $4. 
D) $4, and consumer surplus with the tax is $16.

Question 5

The less freedom young mothers have to work outside the home, the

Accepted Answer

A) more elastic the supply of labor will be. 
B) less elastic the supply of labor will be. 
C) more horizontal the labor supply curve will be. 
D) larger is the decrease in employment that will result from a tax on labor. 
A) more elastic the supply of labor will be. 
B) less elastic the supply of labor will be. 
C) more horizontal the labor supply curve will be. 
D) larger is the decrease in employment that will result from a tax on labor.

Question 6

Figure 8-2
The vertical distance between points C and D represents a tax in the market.
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-Refer to Figure 8-2. Total surplus without the tax is

Accepted Answer

A) $30, and total surplus with the tax is $40. 
B) $40, and total surplus with the tax is $30. 
C) $24, and total surplus with the tax is $6. 
D) $6, and total surplus with the tax is $24. 
A) $30, and total surplus with the tax is $40. 
B) $40, and total surplus with the tax is $30. 
C) $24, and total surplus with the tax is $6. 
D) $6, and total surplus with the tax is $24.

Question 7

A tax on a good

Accepted Answer

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

Question 8

Figure 8-9
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   ​
-Refer to Figure 8-9. Suppose the government places a $4 tax per unit on this good. How much is the deadweight loss from this tax?

Accepted Answer

The deadweight loss

Question 9

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 10

When a tax is levied on a good, the buyers and sellers of the good share the burden,

Accepted Answer

A) provided the tax is levied on the sellers. 
B) provided the tax is levied on the buyers. 
C) provided a portion of the tax is levied on the buyers, with the remaining portion levied on the sellers. 
D) regardless of how the tax is levied. 
A) provided the tax is levied on the sellers. 
B) provided the tax is levied on the buyers. 
C) provided a portion of the tax is levied on the buyers, with the remaining portion levied on the sellers. 
D) regardless of how the tax is levied.

Question 11

Figure 8-10
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   ​
-Refer to Figure 8-10. How much is consumer surplus at the market equilibrium?

Accepted Answer

Consumer surplus is

Question 12

A tax places a wedge between the price buyers pay and the price sellers receive.

Accepted Answer

A) True 
 B)False

Question 13

Suppose that the market for product X is characterized by a typical, downward-sloping, linear demand curve and a typical, upward-sloping, linear supply curve. If a $2 tax per unit results in a deadweight loss of $200, how large would be the deadweight loss from a $4 tax per unit?

Accepted Answer

The deadweight loss will be $8

Question 14

Economists disagree on whether labor taxes have a small or large deadweight loss.

Accepted Answer

A) True 
 B)False

Question 15

Figure 8-2
The vertical distance between points C and D represents a tax in the market.
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-Refer to Figure 8-2. The loss of consumer surplus for those buyers of the good who continue to buy it after the tax is imposed is

Accepted Answer

A) $4. 
B) $6. 
C) $12. 
D) $8. 
A) $4. 
B) $6. 
C) $12. 
D) $8.

Question 16

A tax on insulin is likely to cause a very large deadweight loss to society.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Figure 8-2
The vertical distance between points C and D represents a tax in the market.
​   ​
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​
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-Refer to Figure 8-2. The loss of producer surplus for those sellers of the good who continue to sell it after the tax is imposed is

Accepted Answer

A) $6. 
B) $4. 
C) $8. 
D) $12. 
A) $6. 
B) $4. 
C) $8. 
D) $12.

Question 19

Suppose the government increases the size of a tax by 20 percent. The deadweight loss from that tax

Accepted Answer

A) increases by 20 percent. 
B) increases by more than 20 percent. 
C) increases but by less than 20 percent. 
D) decreases by 20 percent. 
A) increases by 20 percent. 
B) increases by more than 20 percent. 
C) increases but by less than 20 percent. 
D) decreases by 20 percent.

Question 20

Figure 8-3
The vertical distance between points A and B represents a tax in the market.  
-Refer to Figure 8-3. Suppose a 20th unit of the good were sold by a seller to a buyer. Which of the following statements is correct?

Accepted Answer

A) For the 20th unit, the difference between the buyer's value and the seller's cost is less than the tax per unit. 
B) For the 20th unit, the difference between the buyer's value and the seller's cost is greater than the tax per unit. 
C) For the 20th unit, the difference between the buyer's value and the seller's cost is equal to the tax per unit. 
D) It makes sense for the buyer to buy and for the seller to sell the 20th unit, with or without the tax in place. 
A) For the 20th unit, the difference between the buyer's value and the seller's cost is less than the tax per unit. 
B) For the 20th unit, the difference between the buyer's value and the seller's cost is greater than the tax per unit. 
C) For the 20th unit, the difference between the buyer's value and the seller's cost is equal to the tax per unit. 
D) It makes sense for the buyer to buy and for the seller to sell the 20th unit, with or without the tax in place.

Exam 8: Applications: The Costs of Taxation

Taxes on labor encourage which of the following?

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

In which of the following instances would the deadweight loss of the tax on airline tickets increase by a factor of 9?

Figure 8-2 The vertical distance between points C and D represents a tax in the market. ​ ​ ​ ​ ​ -Refer to Figure 8-2. Consumer surplus without the tax is

The less freedom young mothers have to work outside the home, the

Figure 8-2 The vertical distance between points C and D represents a tax in the market. ​ ​ ​ ​ ​ -Refer to Figure 8-2. Total surplus without the tax is

A tax on a good

Figure 8-9 ​ ​ -Refer to Figure 8-9. Suppose the government places a $4 tax per unit on this good. How much is the deadweight loss from this tax?

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

When a tax is levied on a good, the buyers and sellers of the good share the burden,

Figure 8-10 ​ ​ -Refer to Figure 8-10. How much is consumer surplus at the market equilibrium?

A tax places a wedge between the price buyers pay and the price sellers receive.

Suppose that the market for product X is characterized by a typical, downward-sloping, linear demand curve and a typical, upward-sloping, linear supply curve. If a $2 tax per unit results in a deadweight loss of $200, how large would be the deadweight loss from a $4 tax per unit?

Economists disagree on whether labor taxes have a small or large deadweight loss.

Figure 8-2 The vertical distance between points C and D represents a tax in the market. ​ ​ ​ ​ ​ -Refer to Figure 8-2. The loss of consumer surplus for those buyers of the good who continue to buy it after the tax is imposed is

A tax on insulin is likely to cause a very large deadweight loss to society.

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

Figure 8-2 The vertical distance between points C and D represents a tax in the market. ​ ​ ​ ​ ​ -Refer to Figure 8-2. The loss of producer surplus for those sellers of the good who continue to sell it after the tax is imposed is

Suppose the government increases the size of a tax by 20 percent. The deadweight loss from that tax

Figure 8-3 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-3. Suppose a 20th unit of the good were sold by a seller to a buyer. Which of the following statements is correct?

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 Nations 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

Filters

Figure 8-2 The vertical distance between points C and D represents a tax in the market. -Refer to Figure 8-2. Consumer surplus without the tax is

Figure 8-2 The vertical distance between points C and D represents a tax in the market. -Refer to Figure 8-2. Total surplus without the tax is

Figure 8-9 -Refer to Figure 8-9. Suppose the government places a $4 tax per unit on this good. How much is the deadweight loss from this tax?

Figure 8-10 -Refer to Figure 8-10. How much is consumer surplus at the market equilibrium?

Figure 8-2 The vertical distance between points C and D represents a tax in the market. -Refer to Figure 8-2. The loss of consumer surplus for those buyers of the good who continue to buy it after the tax is imposed is

Figure 8-2 The vertical distance between points C and D represents a tax in the market. -Refer to Figure 8-2. The loss of producer surplus for those sellers of the good who continue to sell it after the tax is imposed is