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 on the buyer

Accepted Answer

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

Question 2

What effect does a tax placed on a product have on the buyer and the seller

Accepted Answer

A) The price the buyer pays and the price the seller receives are higher. 
B) The price the buyer pays and the price the seller receives are lower. 
C) The price the buyer pays is lower and the price the seller receives is higher. 
D) The price the buyer pays is higher and the price the seller receives is lower. 
A) The price the buyer pays and the price the seller receives are higher. 
B) The price the buyer pays and the price the seller receives are lower. 
C) The price the buyer pays is lower and the price the seller receives is higher. 
D) The price the buyer pays is higher and the price the seller receives is lower.

Question 3

When a tax is imposed on a product,what happens to quantity demanded and quantity supplied

Accepted Answer

A) Quantity demanded will increase and quantity supplied will decrease. 
B) Quantity demanded will decrease and quantity supplied will increase. 
C) Quantity demanded and quantity supplied will both increase. 
D) Quantity demanded and quantity supplied will both decrease. 
A) Quantity demanded will increase and quantity supplied will decrease. 
B) Quantity demanded will decrease and quantity supplied will increase. 
C) Quantity demanded and quantity supplied will both increase. 
D) Quantity demanded and quantity supplied will both decrease.

Question 4

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

Accepted Answer

A) $1500 
B) $3600 
C) $4500 
D) $6000 
A) $1500 
B) $3600 
C) $4500 
D) $6000

Question 5

What would a tax placed on land cause

Accepted Answer

A) a huge deadweight loss 
B) no deadweight loss 
C) landlords not to bear any of the burden of the tax 
D) enough tax revenue so that all other taxes could be eliminated 
A) a huge deadweight loss 
B) no deadweight loss 
C) landlords not to bear any of the burden of the tax 
D) enough tax revenue so that all other taxes could be eliminated

Question 6

If the government quadrupled the tax on gasoline,what happens to the deadweight loss from the gasoline tax

Accepted Answer

A) It would more than quadruple. 
B) It would quadruple. 
C) It would increase, but it would not quadruple. 
D) It would not change. 
A) It would more than quadruple. 
B) It would quadruple. 
C) It would increase, but it would not quadruple. 
D) It would not change.

Question 7

During an election campaign, the conservative party argued that government can raise tax revenue by reducing the marginal tax rate. Why are most economists skeptical about this argument?

Accepted Answer

Even though lower taxes would give peopl

Question 8

Suppose a tax is imposed on the buyers of a product.On whom will the burden of the tax fall

Accepted Answer

A) on the buyers and the government 
B) on the sellers and the government 
C) on the buyers, sellers and the government 
D) on the buyers and the sellers 
A) on the buyers and the government 
B) on the sellers and the government 
C) on the buyers, sellers and the government 
D) on the buyers and the sellers

Question 9

Figure 8-6
  
-Refer to Figure 8-6.What would the reduction in producer surplus caused by the tax be

Accepted Answer

A) $60 
B) $70 
C) $80 
D) $100 
A) $60 
B) $70 
C) $80 
D) $100

Question 10

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 Lincoln's gain in producer surplus as a result of the proposed transaction

Accepted Answer

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

Question 11

Suppose the government places a tax on a product.How does the cost of the tax compare with the revenue raised

Accepted Answer

A) The cost of the tax to buyers and sellers is less than the revenue raised from the tax by the government. 
B) The cost of the tax to buyers and sellers equals the revenue raised from the tax by the government. 
C) The cost of the tax to buyers and sellers exceeds the revenue raised from the tax by the government. 
D) Without additional information, such as the elasticity of demand for this product, it is impossible to compare tax cost with tax revenue. 
A) The cost of the tax to buyers and sellers is less than the revenue raised from the tax by the government. 
B) The cost of the tax to buyers and sellers equals the revenue raised from the tax by the government. 
C) The cost of the tax to buyers and sellers exceeds the revenue raised from the tax by the government. 
D) Without additional information, such as the elasticity of demand for this product, it is impossible to compare tax cost with tax revenue.

Question 12

When a tax is imposed on a good,what do we know about the losses to buyers and sellers

Accepted Answer

A) They are equal to the revenue raised by the government. 
B) They are less than the revenue raised by the government. 
C) They exceed the revenue raised by the government. 
D) They cannot be compared to the tax revenue raised by the government since the amount of the tax will vary from good to good. 
A) They are equal to the revenue raised by the government. 
B) They are less than the revenue raised by the government. 
C) They exceed the revenue raised by the government. 
D) They cannot be compared to the tax revenue raised by the government since the amount of the tax will vary from good to good.

Question 13

As the size of a tax increases,what will happen to tax revenue

Accepted Answer

A) It will increase. 
B) It will decrease. 
C) It will remain the same. 
D) It will increase then decrease. 
A) It will increase. 
B) It will decrease. 
C) It will remain the same. 
D) It will increase then decrease.

Question 14

The EI tax,and to a large extent the federal income tax,are labour taxes.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) It would fall by $900. 
B) It would fall by $1800. 
C) It would fall by $2700. 
D) It would fall by $3600. 
A) It would fall by $900. 
B) It would fall by $1800. 
C) It would fall by $2700. 
D) It would fall by $3600.

Question 16

When a tax is placed on the buyer of a product,what is the result

Accepted Answer

A) buyers pay less and sellers receive more 
B) buyers pay less and sellers receive less 
C) buyers pay more and sellers receive more 
D) buyers pay more and sellers receive less 
A) buyers pay less and sellers receive more 
B) buyers pay less and sellers receive less 
C) buyers pay more and sellers receive more 
D) buyers pay more and sellers receive less

Question 17

Figure 8-5
  
-Refer to Figure 8-5.Without the tax,what would the equilibrium price and quantity be

Accepted Answer

A) $6 and 300 
B) $10 and 300 
C) $10 and 600 
D) $16 and 300 
A) $6 and 300 
B) $10 and 300 
C) $10 and 600 
D) $16 and 300

Question 18

Figure 8-6
  
-Refer to Figure 8-6.What is the price buyers pay after the tax

Accepted Answer

A) $4 
B) $8 
C) $12 
D) $16 
A) $4 
B) $8 
C) $12 
D) $16

Question 19

During Ronald Reagan's first term in office,income tax rates were reduced significantly.What was the result

Accepted Answer

A) Income tax collections declined. 
B) Income tax revenue increased. 
C) The Laffer curve was demonstrated to be essentially correct. 
D) The government experienced budget surpluses for four consecutive years. 
A) Income tax collections declined. 
B) Income tax revenue increased. 
C) The Laffer curve was demonstrated to be essentially correct. 
D) The government experienced budget surpluses for four consecutive years.

Question 20

Suppose that the equilibrium quantity in the market for widgets has been 200 per month.Then a tax of $5 per widget is imposed.As a result,the government is able to raise $750 per month in revenue.By how much has the equilibrium quantity of widgets fallen

Accepted Answer

A) 25 per month 
B) 50 per month 
C) 75 per month 
D) 100 per month 
A) 25 per month 
B) 50 per month 
C) 75 per month 
D) 100 per month

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 on the buyer

What effect does a tax placed on a product have on the buyer and the seller

When a tax is imposed on a product,what happens to quantity demanded and quantity supplied

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

What would a tax placed on land cause

If the government quadrupled the tax on gasoline,what happens to the deadweight loss from the gasoline tax

During an election campaign, the conservative party argued that government can raise tax revenue by reducing the marginal tax rate. Why are most economists skeptical about this argument?

Suppose a tax is imposed on the buyers of a product.On whom will the burden of the tax fall

Figure 8-6 -Refer to Figure 8-6.What would the reduction in producer surplus caused by the tax be

Suppose the government places a tax on a product.How does the cost of the tax compare with the revenue raised

When a tax is imposed on a good,what do we know about the losses to buyers and sellers

As the size of a tax increases,what will happen to tax revenue

The EI tax,and to a large extent the federal income tax,are labour taxes.

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

When a tax is placed on the buyer of a product,what is the result

Figure 8-5 -Refer to Figure 8-5.Without the tax,what would the equilibrium price and quantity be

Figure 8-6 -Refer to Figure 8-6.What is the price buyers pay after the tax

During Ronald Reagan's first term in office,income tax rates were reduced significantly.What was the result

Suppose that the equilibrium quantity in the market for widgets has been 200 per month.Then a tax of $5 per widget is imposed.As a result,the government is able to raise $750 per month in revenue.By how much has the equilibrium quantity of widgets fallen

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

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