Question 1

Figure 8-2
  
-Refer to Figure 8-2.What is the per-unit burden of the tax on the sellers

Accepted Answer

A) (P₃ - P₁)/(Q₂ - Q₁) 
B) P₃ - P₂ 
C) (P₂ - P₁)/(Q₂ - Q₁) 
D) P₂ - P₁ 
A) (P₃ - P₁)/(Q₂ - Q₁) 
B) P₃ - P₂ 
C) (P₂ - P₁)/(Q₂ - Q₁) 
D) P₂ - P₁

Question 2

What happens if a government increases the tax rate

Accepted Answer

A) As the tax rate increases, tax revenue continually rises and deadweight loss continually falls. 
B) As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss rises but also begins to fall as tax revenue falls. 
C) As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss continually rises. 
D) As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss falls for a while, but begins to rise as tax revenue falls. 
A) As the tax rate increases, tax revenue continually rises and deadweight loss continually falls. 
B) As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss rises but also begins to fall as tax revenue falls. 
C) As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss continually rises. 
D) As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss falls for a while, but begins to rise as tax revenue falls.

Question 3

Suppose that the equilibrium quantity in the market for widgets has been 300 per month.Then a tax of $5 per widget is imposed.The price paid by buyers increases by $2 and the after-tax price received by sellers falls by $3.The government is able to raise 1000 per month in revenue from the tax.What is the deadweight loss from the tax

Accepted Answer

A) $50 
B) $100 
C) $250 
D) $500 
A) $50 
B) $100 
C) $250 
D) $500

Question 4

Figure 8-3
  
-Refer to Figure 8-3.What is the equilibrium price before the tax

Accepted Answer

A) $6 
B) $10 
C) $16 
D) $24 
A) $6 
B) $10 
C) $16 
D) $24

Question 5

Figure 8-4
  
-Refer to Figure 8-4.Which area represents consumer surplus after the tax is levied on the consumer

Accepted Answer

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

Question 6

Scenario 8-1
Assume that Kierra cleans Cate's house weekly for $100.Cate would be willing to pay as much as $125 weekly to have her house cleaned.Kierra's opportunity cost is $80.
-Refer to Scenario 8-1.If Kierra cleans Cate's house,what is the consumer surplus

Accepted Answer

A) $25 
B) $80 
C) $100 
D) $125 
A) $25 
B) $80 
C) $100 
D) $125

Question 7

Since the amount of land is fixed,how elastic is the total supply of land

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 8

Figure 8-5
  
-Refer to Figure 8-5.If the tax is imposed in this market,what price would the sellers receive for their product

Accepted Answer

A) $2 
B) $6 
C) $10 
D) $16 
A) $2 
B) $6 
C) $10 
D) $16

Question 9

Figure 8-5
  
-Refer to Figure 8-5.If the tax is imposed on the seller,what price would the sellers receive for their product

Accepted Answer

A) $2 
B) $6 
C) $10 
D) $16 
A) $2 
B) $6 
C) $10 
D) $16

Question 10

Figure 8-2
  
-Refer to Figure 8-2.What is the price sellers receive after the tax

Accepted Answer

A) P₁ 
B) P₂ 
C) P₃ 
D) P₃ - P₂ 
A) P₁ 
B) P₂ 
C) P₃ 
D) P₃ - P₂

Question 11

When a tax is placed on the buyers of snowboards,what is the result

Accepted Answer

A) The size of the snowboards market is reduced. 
B) The price of snowboards decreases. 
C) The supply of snowboards decreases. 
D) The price of snowboards increases, and the equilibrium quantity of snowboards is unchanged. 
A) The size of the snowboards market is reduced. 
B) The price of snowboards decreases. 
C) The supply of snowboards decreases. 
D) The price of snowboards increases, and the equilibrium quantity of snowboards is unchanged.

Question 12

Assume that a tax is levied on a good and that the government uses the revenue to clean up lethal toxic waste that would cause irreparable harm to a large number of people.In this case,which of the following outcomes would NOT occur

Accepted Answer

A) a decrease in consumer surplus to consumers of the taxed good 
B) a decrease in producer surplus to producers of the taxed good 
C) an increase in the total economic welfare of society 
D) a decrease in the total economic welfare of society 
A) a decrease in consumer surplus to consumers of the taxed good 
B) a decrease in producer surplus to producers of the taxed good 
C) an increase in the total economic welfare of society 
D) a decrease in the total economic welfare of society

Question 13

Figure 8-6
  
-Refer to Figure 8-6.What was consumer surplus before the tax was levied

Accepted Answer

A) $45 
B) $75 
C) $125 
D) $150 
A) $45 
B) $75 
C) $125 
D) $150

Question 14

A tax is imposed on a market with elastic demand and inelastic supply.Who bears most of the burden of the tax

Accepted Answer

A) Buyers will bear most of the burden of the tax. 
B) Sellers will bear most of the burden of the tax. 
C) The burden of the tax will be shared equally between buyers and sellers. 
D) The burden of the tax will be shared equally between buyers and the government. 
A) Buyers will bear most of the burden of the tax. 
B) Sellers will bear most of the burden of the tax. 
C) The burden of the tax will be shared equally between buyers and sellers. 
D) The burden of the tax will be shared equally between buyers and the government.

Question 15

Figure 8-5
  
-Refer to Figure 8-5.Without the tax,what would the consumer surplus be in this market

Accepted Answer

A) $2400 
B) $3000 
C) $3600 
D) $6000 
A) $2400 
B) $3000 
C) $3600 
D) $6000

Question 16

Figure 8-5
  
-Refer to Figure 8-5.What would happen to producer surplus if the tax were imposed on the buyer

Accepted Answer

A) It would fall by $600. 
B) It would fall by $900. 
C) It would fall by $1800. 
D) It would fall by $2400. 
A) It would fall by $600. 
B) It would fall by $900. 
C) It would fall by $1800. 
D) It would fall by $2400.

Question 17

Figure 8-5
  
-Refer to Figure 8-5.If the tax is imposed in this market,what would consumer surplus be

Accepted Answer

A) $600 
B) $900 
C) $1800 
D) $2200 
A) $600 
B) $900 
C) $1800 
D) $2200

Question 18

Given the supply of land is fixed,who would pay a tax on land

Accepted Answer

A) the landowners 
B) the renters or users of the land 
C) partly landowners and partly land users 
D) workers 
A) the landowners 
B) the renters or users of the land 
C) partly landowners and partly land users 
D) workers

Question 19

Figure 8-6
  
-Refer to Figure 8-6.What would producer surplus be after the tax is levied on the seller

Accepted Answer

A) $45 
B) $75 
C) $125 
D) $150 
A) $45 
B) $75 
C) $125 
D) $150

Question 20

Consider a (per unit) tax on two different goods,X and Y.Good X has very elastic demand,while good Y has very inelastic demand.Assume the supply curve for each good is the same.If the government wants to minimize deadweight loss,which good should they tax

Accepted Answer

Figure 8.5 in the textbook sho

Exam 8: Application: the Costs of Taxation

Figure 8-2 -Refer to Figure 8-2.What is the per-unit burden of the tax on the sellers

What happens if a government increases the tax rate

Figure 8-3 -Refer to Figure 8-3.What is the equilibrium price before the tax

Figure 8-4 -Refer to Figure 8-4.Which area represents consumer surplus after the tax is levied on the consumer

Scenario 8-1 Assume that Kierra cleans Cate's house weekly for $100.Cate would be willing to pay as much as $125 weekly to have her house cleaned.Kierra's opportunity cost is $80. -Refer to Scenario 8-1.If Kierra cleans Cate's house,what is the consumer surplus

Since the amount of land is fixed,how elastic is the total supply of land

Figure 8-5 -Refer to Figure 8-5.If the tax is imposed in this market,what price would the sellers receive for their product

Figure 8-5 -Refer to Figure 8-5.If the tax is imposed on the seller,what price would the sellers receive for their product

Figure 8-2 -Refer to Figure 8-2.What is the price sellers receive after the tax

When a tax is placed on the buyers of snowboards,what is the result

Assume that a tax is levied on a good and that the government uses the revenue to clean up lethal toxic waste that would cause irreparable harm to a large number of people.In this case,which of the following outcomes would NOT occur

Figure 8-6 -Refer to Figure 8-6.What was consumer surplus before the tax was levied

A tax is imposed on a market with elastic demand and inelastic supply.Who bears most of the burden of the tax

Figure 8-5 -Refer to Figure 8-5.Without the tax,what would the consumer surplus be in this market

Figure 8-5 -Refer to Figure 8-5.What would happen to producer surplus if the tax were imposed on the buyer

Figure 8-5 -Refer to Figure 8-5.If the tax is imposed in this market,what would consumer surplus be

Given the supply of land is fixed,who would pay a tax on land

Figure 8-6 -Refer to Figure 8-6.What would producer surplus be after the tax is levied on the seller

Consider a (per unit) tax on two different goods,X and Y.Good X has very elastic demand,while good Y has very inelastic demand.Assume the supply curve for each good is the same.If the government wants to minimize deadweight loss,which good should they tax

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 of Microeconomics

Filters