Exam 12: Social Policy and Inequality

Figure 12.3 -Refer to Figure 12.3.The figure above shows a demand curve and two supply curves,one more elastic than the other.Use Figure 12.3 to answer the following questions: a.Suppose the government imposes an excise tax of $1.00 on every unit sold.Use the graph to illustrate the impact of this tax. b.If the government imposes an excise tax of $1.00 on every unit sold,will the consumer pay more of the tax if the supply curve is S₁ or S₂? Refer to the graphs in your answer. c.If an excise tax of $1.00 on every unit sold is imposed,will the revenue collected by the government be greater if the supply curve is S₁ or S₂? d.If the government imposes an excise tax of $1.00 on every unit sold,will the deadweight loss be greater if the supply curve is S₁ or S₂? -------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------

Figure 12.7 Figure 12.7 shows the Lorenz curve for a hypothetical country. -Refer to Figure 12.7.The second highest 20 per cent of households

What is the difference between the poverty line and the poverty rate? -------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------

Figure 12.2 Figure 12.2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 12.2.If the government imposes an excise tax of $1.00 on every unit sold,what is the size of the deadweight loss,if there is any?

The excess burden of a tax