Question 1

Figure 8-5
  
-Refer to Figure 8-5.If the tax is imposed on the buyer,what would the consumer surplus be

Accepted Answer

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

Question 2

The most important tax in the Canadian economy is the corporate profit tax.

Accepted Answer

A) True 
 B)False

Question 3

Scenario 8-2
Lincoln offers to do Katelyn's housework for $80 per week.Katelyn's opportunity cost of doing housework is $100 per week, and Lincoln's opportunity cost of doing housework is $60 per week.
-Refer to Scenario 8-2.What will be Katelyn's gain in consumer surplus as a result of the proposed transaction

Accepted Answer

A) Katelyn will gain $20 per week. 
B) Katelyn will gain $30 per week. 
C) Katelyn will gain $40 per week. 
D) Katelyn will gain $50 per week. 
A) Katelyn will gain $20 per week. 
B) Katelyn will gain $30 per week. 
C) Katelyn will gain $40 per week. 
D) Katelyn will gain $50 per week.

Question 4

Figure 8-4
  
-Refer to Figure 8-4.What is the equilibrium market price and quantity before the tax is imposed

Accepted Answer

A) P₁ and Q₁ 
B) P₂ and Q₂ 
C) P₃ and Q₁ 
D) P₁ and Q₂ 
A) P₁ and Q₁ 
B) P₂ and Q₂ 
C) P₃ and Q₁ 
D) P₁ and Q₂

Question 5

Consider a perfectly competitive labour market, Labour Demand is given by LD = 150 – 5W, and Labour Supply is given by LS = 10W, where W is the market wage rate.
a. Solve for the market equilibrium wage and level of employment in the market.
b. In order to stimulate employment in this industry, the government offers workers an additional $3 for each unit of labour worked. Find the new market equilibrium.
c. In this case, what is the welfare gain in the labour market?

Accepted Answer

a.    To find the equilibrium, set labou

Question 6

If a tax is imposed on the buyer of a product,what is the effect on the demand curve

Accepted Answer

A) It shifts downward by the amount of the tax. 
B) It shifts upward by the amount of the tax. 
C) It shifts downward by less than the amount of the tax. 
D) It shifts upward by more than the amount of the tax. 
A) It shifts downward by the amount of the tax. 
B) It shifts upward by the amount of the tax. 
C) It shifts downward by less than the amount of the tax. 
D) It shifts upward by more than the amount of the tax.

Question 7

What happens if a government reduces a high tax rate

Accepted Answer

A) Reducing a high tax rate is less likely to increase tax revenue than reducing a low tax rate. 
B) Reducing a high tax rate is more likely to increase tax revenue than reducing a low tax rate. 
C) Reducing a high tax rate will have the same effect on tax revenue as reducing a low tax rate. 
D) Reducing a tax rate can never increase tax revenue. 
A) Reducing a high tax rate is less likely to increase tax revenue than reducing a low tax rate. 
B) Reducing a high tax rate is more likely to increase tax revenue than reducing a low tax rate. 
C) Reducing a high tax rate will have the same effect on tax revenue as reducing a low tax rate. 
D) Reducing a tax rate can never increase tax revenue.

Question 8

If a country's tax rates are high,where is that country most likely to be on the Laffer curve

Accepted Answer

A) on the top of the Laffer curve 
B) on the positively sloped part of the Laffer curve 
C) above the Laffer curve 
D) on the negatively sloped part of the Laffer curve 
A) on the top of the Laffer curve 
B) on the positively sloped part of the Laffer curve 
C) above the Laffer curve 
D) on the negatively sloped part of the Laffer curve

Question 9

When a tax is levied on a good,what happens to the market price and why

Accepted Answer

A) The market price falls because quantity demanded falls. 
B) The market price falls because quantity supplied falls. 
C) The market price rises because both quantity demanded and quantity supplied falls. 
D) The market price rises because both quantity demanded and quantity supplied rises. 
A) The market price falls because quantity demanded falls. 
B) The market price falls because quantity supplied falls. 
C) The market price rises because both quantity demanded and quantity supplied falls. 
D) The market price rises because both quantity demanded and quantity supplied rises.

Question 10

If the labour supply curve is nearly vertical,what will a tax on labour do

Accepted Answer

A) have a large deadweight loss 
B) raise small amounts of tax revenue 
C) have little impact on the amount of work workers are willing to do 
D) shift the labour demand curve to the right 
A) have a large deadweight loss 
B) raise small amounts of tax revenue 
C) have little impact on the amount of work workers are willing to do 
D) shift the labour demand curve to the right

Question 11

Figure 8-5
  
-Refer to Figure 8-5.If the tax is imposed on the seller,what would the producer surplus be

Accepted Answer

A) $600 
B) $900 
C) $1200 
D) $1500 
A) $600 
B) $900 
C) $1200 
D) $1500

Question 12

Suppose a $2 tax is placed on the sellers of BBQ propane.How will the supply curve shift

Accepted Answer

A) right (downward) by exactly $2 
B) left (upward) by less than $2 
C) left (upward) by exactly $2 
D) right (downward) by less than $2 
A) right (downward) by exactly $2 
B) left (upward) by less than $2 
C) left (upward) by exactly $2 
D) right (downward) by less than $2

Question 13

What was one side effect of the tax cuts made during Ronald Reagan's terms as president

Accepted Answer

A) increased tax revenues 
B) small budget surpluses 
C) large budget deficits 
D) decreased government spending 
A) increased tax revenues 
B) small budget surpluses 
C) large budget deficits 
D) decreased government spending

Question 14

Figure 8-2
  
-Refer to Figure 8-2.What is the price paid and quantity supplied after the tax

Accepted Answer

A) P₁ and Q₁ 
B) P₂ and Q₂ 
C) P₃ and Q₁ 
D) P₂ and Q₁ 
A) P₁ and Q₁ 
B) P₂ and Q₂ 
C) P₃ and Q₁ 
D) P₂ and Q₁

Question 15

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 on the seller

Accepted Answer

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

Question 16

When a tax on a good is enacted,who bears the burden of the tax

Accepted Answer

A) Buyers and sellers share the burden of the tax regardless of whom it is levied on. 
B) Buyers always bear the full burden of the tax. 
C) Sellers always bear the full burden of the tax. 
D) The full burden of the tax falls on whoever the tax is levied on. 
A) Buyers and sellers share the burden of the tax regardless of whom it is levied on. 
B) Buyers always bear the full burden of the tax. 
C) Sellers always bear the full burden of the tax. 
D) The full burden of the tax falls on whoever the tax is levied on.

Question 17

Figure 8-5
  
-Refer to Figure 8-5.What would happen to total surplus in this market if the tax were imposed

Accepted Answer

A) It would fall by $1500. 
B) It would increase by $1500. 
C) It would fall by $3000. 
D) It would increase by $3000. 
A) It would fall by $1500. 
B) It would increase by $1500. 
C) It would fall by $3000. 
D) It would increase by $3000.

Question 18

How is the tax benefit received by the government measured

Accepted Answer

A) by deadweight loss 
B) by tax revenue 
C) by equilibrium price 
D) by equilibrium quantity 
A) by deadweight loss 
B) by tax revenue 
C) by equilibrium price 
D) by equilibrium quantity

Question 19

What effect does a tax levied on the buyers of a product have

Accepted Answer

A) It shifts the supply curve upward (or to the left). 
B) It shifts the supply curve downward (or to the right). 
C) It shifts the demand curve downward (or to the left). 
D) It shifts the demand curve upward (or to the right). 
A) It shifts the supply curve upward (or to the left). 
B) It shifts the supply curve downward (or to the right). 
C) It shifts the demand curve downward (or to the left). 
D) It shifts the demand curve upward (or to the right).

Question 20

When the size of a tax is doubled,what happens to the deadweight loss from the tax

Accepted Answer

A) It increases by the size of the tax. 
B) It doubles. 
C) It remains constant. 
D) It increases by a factor of four. 
A) It increases by the size of the tax. 
B) It doubles. 
C) It remains constant. 
D) It increases by a factor of four.

Figure 8-5 -Refer to Figure 8-5.If the tax is imposed on the buyer,what would the consumer surplus be

The most important tax in the Canadian economy is the corporate profit tax.

Figure 8-4 -Refer to Figure 8-4.What is the equilibrium market price and quantity before the tax is imposed

If a tax is imposed on the buyer of a product,what is the effect on the demand curve

What happens if a government reduces a high tax rate

If a country's tax rates are high,where is that country most likely to be on the Laffer curve

When a tax is levied on a good,what happens to the market price and why

If the labour supply curve is nearly vertical,what will a tax on labour do

Figure 8-5 -Refer to Figure 8-5.If the tax is imposed on the seller,what would the producer surplus be

Suppose a $2 tax is placed on the sellers of BBQ propane.How will the supply curve shift

What was one side effect of the tax cuts made during Ronald Reagan's terms as president

Figure 8-2 -Refer to Figure 8-2.What is the price paid and quantity supplied after the tax

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 on the seller

When a tax on a good is enacted,who bears the burden of the tax

Figure 8-5 -Refer to Figure 8-5.What would happen to total surplus in this market if the tax were imposed

How is the tax benefit received by the government measured

What effect does a tax levied on the buyers of a product have

When the size of a tax is doubled,what happens to the deadweight loss from the 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

Exam 8: Application: the Costs of Taxation

Figure 8-5 -Refer to Figure 8-5.If the tax is imposed on the buyer,what would the consumer surplus be

The most important tax in the Canadian economy is the corporate profit tax.

Figure 8-4 -Refer to Figure 8-4.What is the equilibrium market price and quantity before the tax is imposed

If a tax is imposed on the buyer of a product,what is the effect on the demand curve

What happens if a government reduces a high tax rate

If a country's tax rates are high,where is that country most likely to be on the Laffer curve

When a tax is levied on a good,what happens to the market price and why

If the labour supply curve is nearly vertical,what will a tax on labour do

Figure 8-5 -Refer to Figure 8-5.If the tax is imposed on the seller,what would the producer surplus be

Suppose a $2 tax is placed on the sellers of BBQ propane.How will the supply curve shift

What was one side effect of the tax cuts made during Ronald Reagan's terms as president

Figure 8-2 -Refer to Figure 8-2.What is the price paid and quantity supplied after the tax

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 on the seller

When a tax on a good is enacted,who bears the burden of the tax

Figure 8-5 -Refer to Figure 8-5.What would happen to total surplus in this market if the tax were imposed

How is the tax benefit received by the government measured

What effect does a tax levied on the buyers of a product have

When the size of a tax is doubled,what happens to the deadweight loss from the 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