Question 1

Figure 8-11  
-Refer to Figure 8-11. The price labeled as P2 on the vertical axis represents the

Accepted Answer

A) difference between the price paid by buyers after the tax is imposed and the price paid by buyers before the tax is imposed. 
B) difference between the price received by sellers before the tax is imposed and the price received by sellers after the tax is imposed. 
C) price of the good before the tax is imposed. 
D) price of the good after the tax is imposed. 
A) difference between the price paid by buyers after the tax is imposed and the price paid by buyers before the tax is imposed. 
B) difference between the price received by sellers before the tax is imposed and the price received by sellers after the tax is imposed. 
C) price of the good before the tax is imposed. 
D) price of the good after the tax is imposed.

Question 2

Suppose a tax of $4 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 2,000 units to 1,700 units. The tax decreases consumer surplus by $3,000 and decreases producer surplus by $4,400. The deadweight loss of the tax is

Accepted Answer

A) $200. 
B) $400. 
C) $600. 
D) $1,200. 
A) $200. 
B) $400. 
C) $600. 
D) $1,200.

Question 3

Figure 8-10  
-Refer to Figure 8-10. Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2. The size of the tax is

Accepted Answer

A) P0-P2. 
B) P2-P8. 
C) P2-P5. 
D) P5-P8. 
A) P0-P2. 
B) P2-P8. 
C) P2-P5. 
D) P5-P8.

Question 4

Figure 8-2
The vertical distance between points A and B represents a tax in the market.  
-Refer to Figure 8-2. The per-unit burden of the tax on sellers is

Accepted Answer

A) $2. 
B) $3. 
C) $4. 
D) $5. 
A) $2. 
B) $3. 
C) $4. 
D) $5.

Question 5

Table 8-1
 $$\begin{array} { | c | c | } 
\hline \text { Marlet } & \text { Chareteristir } \
\hline \text { A } & \text { Denand is very elatic. } \
\hline B & \text { Denand is very inelastic. } \
\hline C & \text { Supply is vey elastic. } \
\hline D & \text { Supply is very inelatic. } \
\hline
\end{array}$$
-Refer to Table 8-1. Suppose the government is considering levying a tax in one or more of the markets described in the table. Which of the markets will maximize the deadweight loss(es) from the tax?

Accepted Answer

A) market B only 
B) markets A and C only 
C) markets B and D only 
D) market D only 
A) market B only 
B) markets A and C only 
C) markets B and D only 
D) market D only

Question 6

Figure 8-16  
-Refer to Figure 8-16. Suppose the government imposes a $1 tax in each of the four markets represented by supply curves S1, S2, S3, and S4. The deadweight will be the smallest in the market represented by

Accepted Answer

A) S1. 
B) S2. 
C) S3. 
D) S4. 
A) S1. 
B) S2. 
C) S3. 
D) S4.

Question 7

Figure 8-11  
-Refer to Figure 8-11. The price labeled as P1 on the vertical axis represents the price

Accepted Answer

A) received by sellers before the tax is imposed. 
B) received by sellers after the tax is imposed. 
C) paid by buyers before the tax is imposed. 
D) paid by buyers after the tax is imposed. 
A) received by sellers before the tax is imposed. 
B) received by sellers after the tax is imposed. 
C) paid by buyers before the tax is imposed. 
D) paid by buyers after the tax is imposed.

Question 8

Suppose that a university charges students a $100 "tax" to register for business classes. The next year the university raises the "tax" to $150. The deadweight loss from the "tax" triples.

Accepted Answer

A) True 
 B)False

Question 9

When the government imposes taxes on buyers and sellers of a good, society loses some of the benefits of market efficiency.

Accepted Answer

A) True 
 B)False

Question 10

The more inelastic are demand and supply, the greater is the deadweight loss of a tax.

Accepted Answer

A) True 
 B)False

Question 11

In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue?

Accepted Answer

A) The price elasticity of demand is small, and the price elasticity of supply is large. 
B) The price elasticity of demand is large, and the price elasticity of supply is small. 
C) The price elasticity of demand and the price elasticity of supply are both small. 
D) The price elasticity of demand and the price elasticity of supply are both large. 
A) The price elasticity of demand is small, and the price elasticity of supply is large. 
B) The price elasticity of demand is large, and the price elasticity of supply is small. 
C) The price elasticity of demand and the price elasticity of supply are both small. 
D) The price elasticity of demand and the price elasticity of supply are both large.

Question 12

Figure 8-4
The vertical distance between points A and B represents a tax in the market.  
-Refer to Figure 8-4. The tax results in a loss of consumer surplus that amounts to

Accepted Answer

A) $120. 
B) $340. 
C) $450. 
D) $510. 
A) $120. 
B) $340. 
C) $450. 
D) $510.

Question 13

The size of the deadweight loss generated from a tax is affected by the

Accepted Answer

A) elasticities of both supply and demand. 
B) elasticity of demand only. 
C) elasticity of supply only. 
D) total revenue collected by the government. 
A) elasticities of both supply and demand. 
B) elasticity of demand only. 
C) elasticity of supply only. 
D) total revenue collected by the government.

Question 14

Figure 8-1  
-Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The producer surplus before the tax is measured by the area

Accepted Answer

A) I+J+K. 
B) I+Y. 
C) L+M+Y. 
D) M. 
A) I+J+K. 
B) I+Y. 
C) L+M+Y. 
D) M.

Question 15

The benefit that government receives from a tax is measured by

Accepted Answer

A) the change in the equilibrium quantity of the good. 
B) the change in the equilibrium price of the good. 
C) tax revenue. 
D) total surplus. 
A) the change in the equilibrium quantity of the good. 
B) the change in the equilibrium price of the good. 
C) tax revenue. 
D) total surplus.

Question 16

Figure 8-4
The vertical distance between points A and B represents a tax in the market.  
-Refer to Figure 8-4. The amount of deadweight loss as a result of the tax is

Accepted Answer

A) $105. 
B) $210. 
C) $490. 
D) $600. 
A) $105. 
B) $210. 
C) $490. 
D) $600.

Question 17

Figure 8-6
The vertical distance between points A and B represents a tax in the market.  
-Refer to Figure 8-6. The amount of the tax on each unit of the good is

Accepted Answer

A) $6. 
B) $8. 
C) $10. 
D) $12. 
A) $6. 
B) $8. 
C) $10. 
D) $12.

Question 18

When a tax is levied on a good, the buyers and sellers of the good share the burden,

Accepted Answer

A) provided the tax is levied on the sellers. 
B) provided the tax is levied on the buyers. 
C) provided a portion of the tax is levied on the buyers, with the remaining portion levied on the sellers. 
D) regardless of how the tax is levied. 
A) provided the tax is levied on the sellers. 
B) provided the tax is levied on the buyers. 
C) provided a portion of the tax is levied on the buyers, with the remaining portion levied on the sellers. 
D) regardless of how the tax is levied.

Question 19

Taxes on labor encourage all of the following except

Accepted Answer

A) older workers to take early retirement from the labor force. 
B) mothers to stay at home rather than work in the labor force. 
C) workers to work overtime. 
D) people to be paid "under the table." 
A) older workers to take early retirement from the labor force. 
B) mothers to stay at home rather than work in the labor force. 
C) workers to work overtime. 
D) people to be paid "under the table."

Question 20

If the size of a tax increases, tax revenue

Accepted Answer

A) increases. 
B) decreases. 
C) remains the same. 
D) may increase, decrease, or remain the same. 
A) increases. 
B) decreases. 
C) remains the same. 
D) may increase, decrease, or remain the same.

Exam 8: Application: The Costs of Taxation

Figure 8-11 -Refer to Figure 8-11. The price labeled as P2 on the vertical axis represents the

Suppose a tax of $4 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 2,000 units to 1,700 units. The tax decreases consumer surplus by $3,000 and decreases producer surplus by $4,400. The deadweight loss of the tax is

Figure 8-10 -Refer to Figure 8-10. Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2. The size of the tax is

Figure 8-2 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-2. The per-unit burden of the tax on sellers is

Figure 8-16 -Refer to Figure 8-16. Suppose the government imposes a $1 tax in each of the four markets represented by supply curves S1, S2, S3, and S4. The deadweight will be the smallest in the market represented by

Figure 8-11 -Refer to Figure 8-11. The price labeled as P1 on the vertical axis represents the price

Suppose that a university charges students a $100 "tax" to register for business classes. The next year the university raises the "tax" to $150. The deadweight loss from the "tax" triples.

When the government imposes taxes on buyers and sellers of a good, society loses some of the benefits of market efficiency.

The more inelastic are demand and supply, the greater is the deadweight loss of a tax.

In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue?

Figure 8-4 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-4. The tax results in a loss of consumer surplus that amounts to

The size of the deadweight loss generated from a tax is affected by the

Figure 8-1 -Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The producer surplus before the tax is measured by the area

The benefit that government receives from a tax is measured by

Figure 8-4 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-4. The amount of deadweight loss as a result of the tax is

Figure 8-6 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-6. The amount of the tax on each unit of the good is

When a tax is levied on a good, the buyers and sellers of the good share the burden,

Taxes on labor encourage all of the following except

If the size of a tax increases, tax revenue

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

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

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

Six Debates Over Macroeconomic Policy

Filters

Figure 8-11 -Refer to Figure 8-11. The price labeled as P₂ on the vertical axis represents the

Figure 8-11 -Refer to Figure 8-11. The price labeled as P₁ on the vertical axis represents the price