Question 1

The marginal tax rate on labour income for many workers in Australia is almost:

Accepted Answer

A) 30 per cent 
B) 40 per cent 
C) 50 per cent 
D) 60 per cent 
A) 30 per cent 
B) 40 per cent 
C) 50 per cent 
D) 60 per cent

Question 2

A tax on luxuries will create a smaller deadweight loss than will the same tax on necessities, ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 3

Graph 8-3   
-According to Graph 8-3, after the tax is levied, producer surplus is:

Accepted Answer

A) $375 
B) $750 
C) $1500 
D) $1125 
A) $375 
B) $750 
C) $1500 
D) $1125

Question 4

Graph 8-3   
-According to Graph 8-3, the amount of deadweight loss in this market resulting from the levying of the tax is:

Accepted Answer

A) $1500 
B) $1125 
C) $375 
D) $750 
A) $1500 
B) $1125 
C) $375 
D) $750

Question 5

Graph 8-1  
-According to Graph 8-1, after the tax is levied, producer surplus is represented by area:

Accepted Answer

A) A 
B) A + B + C 
C) D + E + F 
D) F 
A) A 
B) A + B + C 
C) D + E + F 
D) F

Question 6

Graph 8-2   This graph shows supply and demand in a free market.
-According to Graph 8-2, if the market is in equilibrium, consumer surplus is represented by area:

Accepted Answer

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

Question 7

Sachin has agreed to mow his sister Darien's lawn each week, for $35.Sachin's opportunity cost is $22, and Darien would be willing to pay $27 to have her lawn mown.What is the maximum tax the government can impose on lawn mowing without discouraging Sachin and Darien from continuing their mutually beneficial arrangement?

Accepted Answer

If the tax is less than $13, there will

Question 8

Often the tax revenue collected by the government equals the reduced welfare of buyers and sellers caused by the tax.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Since the amount of land is fixed, the total supply of land is:

Accepted Answer

A) relatively elastic 
B) perfectly elastic 
C) perfectly inelastic 
D) relatively inelastic 
A) relatively elastic 
B) perfectly elastic 
C) perfectly inelastic 
D) relatively inelastic

Question 11

Taxes cause inefficiencies only when government revenue is less than the deadweight loss.

Accepted Answer

A) True 
 B)False

Question 12

Economists disagree on the issue of how much labour taxes distort the outcome in labour markets and create deadweight loss.What characteristic of labour supply is at the heart of the disagreement?

Accepted Answer

The disagreement among economists about

Question 13

The benefit received by the government from a tax is measured by:

Accepted Answer

A) deadweight loss 
B) tax revenue 
C) equilibrium price 
D) total surplus 
A) deadweight loss 
B) tax revenue 
C) equilibrium price 
D) total surplus

Question 14

Because taxes distort incentives, they cause markets to allocate resources inefficiently.

Accepted Answer

A) True 
 B)False

Question 15

When a tax is levied on a good buyers are worse off but not sellers.

Accepted Answer

A) True 
 B)False

Question 16

The less freedom people are given to choose the date of their retirement the:

Accepted Answer

A) more elastic the supply of labour 
B) less elastic the supply of labour 
C) flatter the labour supply curve 
D) larger the reduction in output caused by a tax on labour 
A) more elastic the supply of labour 
B) less elastic the supply of labour 
C) flatter the labour supply curve 
D) larger the reduction in output caused by a tax on labour

Question 17

According to the information provided, the total gain in welfare due to the transaction described here is:

Accepted Answer

A) $15 per week 
B) $65 per week 
C) $50 per week 
D) $45 per week 
A) $15 per week 
B) $65 per week 
C) $50 per week 
D) $45 per week

Question 18

A tax levied on the buyers of a product shifts the:

Accepted Answer

A) supply curve upwards or to the left 
B) supply curve downwards or to the right 
C) demand curve upwards or to the right 
D) demand curve downwards or to the left 
A) supply curve upwards or to the left 
B) supply curve downwards or to the right 
C) demand curve upwards or to the right 
D) demand curve downwards or to the left

Question 19

Graph 8-3   
-According to Graph 8-3, the total surplus (consumer, producer and government) with the tax is:

Accepted Answer

A) $2250 
B) $1500 
C) $1875 
D) $1125 
A) $2250 
B) $1500 
C) $1875 
D) $1125

Question 20

Graph 8-1  
-According to Graph 8-1, the price buyers pay after the tax is:

Accepted Answer

A) P₃ 
B) P₂ 
C) P₁ 
D) impossible to determine 
A) P₃ 
B) P₂ 
C) P₁ 
D) impossible to determine

Exam 8: Application: the Costs of Taxation

The marginal tax rate on labour income for many workers in Australia is almost:

A tax on luxuries will create a smaller deadweight loss than will the same tax on necessities, ceteris paribus.

Graph 8-3 -According to Graph 8-3, after the tax is levied, producer surplus is:

Graph 8-3 -According to Graph 8-3, the amount of deadweight loss in this market resulting from the levying of the tax is:

Graph 8-1 -According to Graph 8-1, after the tax is levied, producer surplus is represented by area:

Graph 8-2 This graph shows supply and demand in a free market. -According to Graph 8-2, if the market is in equilibrium, consumer surplus is represented by area:

Often the tax revenue collected by the government equals the reduced welfare of buyers and sellers caused by the tax.

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

Since the amount of land is fixed, the total supply of land is:

Taxes cause inefficiencies only when government revenue is less than the deadweight loss.

Economists disagree on the issue of how much labour taxes distort the outcome in labour markets and create deadweight loss.What characteristic of labour supply is at the heart of the disagreement?

The benefit received by the government from a tax is measured by:

Because taxes distort incentives, they cause markets to allocate resources inefficiently.

When a tax is levied on a good buyers are worse off but not sellers.

The less freedom people are given to choose the date of their retirement the:

According to the information provided, the total gain in welfare due to the transaction described here is:

A tax levied on the buyers of a product shifts the:

Graph 8-3 -According to Graph 8-3, the total surplus (consumer, producer and government) with the tax is:

Graph 8-1 -According to Graph 8-1, the price buyers pay after the tax is:

Ten Lessons From 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

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

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 Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

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