Question 1

Figure 8-6
  
-Refer to Figure 8-6.What is the amount of deadweight loss in this market resulting from the levying of the tax

Accepted Answer

A) $20 
B) $30 
C) $40 
D) $50 
A) $20 
B) $30 
C) $40 
D) $50

Question 2

Figure 8-5
  
-Refer to Figure 8-5.If the government imposes the tax in this market,what will the tax revenue be

Accepted Answer

A) $600 
B) $900 
C) $1500 
D) $3000 
A) $600 
B) $900 
C) $1500 
D) $3000

Question 3

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

Accepted Answer

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

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

When a good is taxed,are buyers and sellers worse off or better off

Accepted Answer

A) Both buyers and sellers are worse off. 
B) Buyers are worse off and sellers are better off. 
C) Sellers are worse off and buyers are better off. 
D) Both buyers and sellers are better off. 
A) Both buyers and sellers are worse off. 
B) Buyers are worse off and sellers are better off. 
C) Sellers are worse off and buyers are better off. 
D) Both buyers and sellers are better off.

Question 6

Figure 8-5
  
-Refer to Figure 8-5.When the tax is placed on this good,what are the quantity sold and the price buyers will pay

Accepted Answer

A) 300 units sold and buyers will pay $10 
B) 600 units sold and buyers will pay $10 
C) 300 units sold and buyers will pay $16 
D) 600 units sold and buyers will pay $16 
A) 300 units sold and buyers will pay $10 
B) 600 units sold and buyers will pay $10 
C) 300 units sold and buyers will pay $16 
D) 600 units sold and buyers will pay $16

Question 7

Figure 8-4
  
-Refer to Figure 8-4.Which area represents the benefit to the government (total tax revenue)

Accepted Answer

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

Question 8

Figure 8-4
  
-Refer to Figure 8-4.Assume the tax was levied on the consumer.Which area represents the reduction in producer surplus

Accepted Answer

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

Question 9

Figure 8-4
  
-Refer to Figure 8-4.Which area represents the loss in total welfare resulting from the levying of the tax on the buyer

Accepted Answer

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

Question 10

If the supply of a good is relatively elastic,what will changing the price cause

Accepted Answer

A) a relatively small change in the amounts that buyers are willing to buy 
B) a relatively small change in the amounts sellers are willing to sell 
C) a relatively large change in the amounts sellers are willing to sell 
D) a relatively large change in the amounts that buyers are willing to buy 
A) a relatively small change in the amounts that buyers are willing to buy 
B) a relatively small change in the amounts sellers are willing to sell 
C) a relatively large change in the amounts sellers are willing to sell 
D) a relatively large change in the amounts that buyers are willing to buy

Question 11

The larger the deadweight loss from taxation,the larger the cost of any government program.

Accepted Answer

A) True 
 B)False

Question 12

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

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 13

What is total surplus with a tax equal to

Accepted Answer

A) consumer surplus plus producer surplus 
B) consumer surplus minus producer surplus 
C) consumer surplus minus tax revenue, plus producer surplus 
D) consumer surplus plus producer surplus, plus tax revenue 
A) consumer surplus plus producer surplus 
B) consumer surplus minus producer surplus 
C) consumer surplus minus tax revenue, plus producer surplus 
D) consumer surplus plus producer surplus, plus tax revenue

Question 14

Assume that the demand for diamonds is more elastic than the demand for gasoline.What happens to the consumer surplus if the same percentage tax is levied on both products

Accepted Answer

A) The loss of consumer surplus is relatively small for diamonds. 
B) The loss of consumer surplus is relatively large for diamonds. 
C) The gain of consumer surplus is relatively small for diamonds. 
D) The gain of consumer surplus is relatively large for diamonds. 
A) The loss of consumer surplus is relatively small for diamonds. 
B) The loss of consumer surplus is relatively large for diamonds. 
C) The gain of consumer surplus is relatively small for diamonds. 
D) The gain of consumer surplus is relatively large for diamonds.

Question 15

What must we do to fully understand how taxes affect economic well-being

Accepted Answer

A) assume that economic well-being is not affected if all tax revenue is spent on goods and services for the Canadian public 
B) know the dollar amount of all taxes raised in the country each year 
C) compare the reduced welfare of buyers and sellers to the amount of government revenue raised 
D) compare the expenditures of the federal government to its tax revenue 
A) assume that economic well-being is not affected if all tax revenue is spent on goods and services for the Canadian public 
B) know the dollar amount of all taxes raised in the country each year 
C) compare the reduced welfare of buyers and sellers to the amount of government revenue raised 
D) compare the expenditures of the federal government to its tax revenue

Question 16

Figure 8-3
  
-Refer to Figure 8-3.What is the price sellers receive after the tax

Accepted Answer

A) $8 
B) $10 
C) $16 
D) $24 
A) $8 
B) $10 
C) $16 
D) $24

Question 17

When a tax is imposed,the loss of consumer surplus and producer surplus as a result of the tax exceeds the revenue raised by the government.

Accepted Answer

A) True 
 B)False

Question 18

When a tax is levied on the sellers of a good,what happens to the supply curve

Accepted Answer

A) shifts left (up) by more than the tax 
B) shifts right (down) by more than the tax 
C) shifts left (up) by an amount equal to the tax 
D) shifts right (down) by an amount equal to the tax 
A) shifts left (up) by more than the tax 
B) shifts right (down) by more than the tax 
C) shifts left (up) by an amount equal to the tax 
D) shifts right (down) by an amount equal to the tax

Question 19

What did both Ronald Reagan and Arthur Laffer agree would result from reducing income tax rates

Accepted Answer

A) increased national debt 
B) decreased government tax collections 
C) increased government tax collections 
D) no change in the amount of revenue the government collected 
A) increased national debt 
B) decreased government tax collections 
C) increased government tax collections 
D) no change in the amount of revenue the government collected

Question 20

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

Accepted Answer

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

Exam 8: Application: the Costs of Taxation

Figure 8-6 -Refer to Figure 8-6.What is the amount of deadweight loss in this market resulting from the levying of the tax

Figure 8-5 -Refer to Figure 8-5.If the government imposes the tax in this market,what will the tax revenue be

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

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

When a good is taxed,are buyers and sellers worse off or better off

Figure 8-5 -Refer to Figure 8-5.When the tax is placed on this good,what are the quantity sold and the price buyers will pay

Figure 8-4 -Refer to Figure 8-4.Which area represents the benefit to the government (total tax revenue)

Figure 8-4 -Refer to Figure 8-4.Assume the tax was levied on the consumer.Which area represents the reduction in producer surplus

Figure 8-4 -Refer to Figure 8-4.Which area represents the loss in total welfare resulting from the levying of the tax on the buyer

If the supply of a good is relatively elastic,what will changing the price cause

The larger the deadweight loss from taxation,the larger the cost of any government program.

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

What is total surplus with a tax equal to

Assume that the demand for diamonds is more elastic than the demand for gasoline.What happens to the consumer surplus if the same percentage tax is levied on both products

What must we do to fully understand how taxes affect economic well-being

Figure 8-3 -Refer to Figure 8-3.What is the price sellers receive after the tax

When a tax is imposed,the loss of consumer surplus and producer surplus as a result of the tax exceeds the revenue raised by the government.

When a tax is levied on the sellers of a good,what happens to the supply curve

What did both Ronald Reagan and Arthur Laffer agree would result from reducing income tax rates

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

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