Question 1

Figure 6-23  
-Refer to Figure 6-23.Which of the following is correct?

Accepted Answer

A) The entire burden of the tax falls on sellers,and none of the burden of the tax falls on buyers. 
B) One-third of the burden of the tax falls on buyers,and two-thirds of the burden of the tax falls on sellers. 
C) One-half of the burden of the tax falls on buyers,and one-half of the burden of the tax falls on sellers. 
D) Two-thirds of the burden of the tax falls on buyers,and one-third of the burden of the tax falls on sellers. 
A) The entire burden of the tax falls on sellers,and none of the burden of the tax falls on buyers. 
B) One-third of the burden of the tax falls on buyers,and two-thirds of the burden of the tax falls on sellers. 
C) One-half of the burden of the tax falls on buyers,and one-half of the burden of the tax falls on sellers. 
D) Two-thirds of the burden of the tax falls on buyers,and one-third of the burden of the tax falls on sellers.

Question 2

Figure 6-20  
-Refer to Figure 6-20.Suppose a tax of $5 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

Accepted Answer

A) less than 25 units 
B) 25 units 
C) between 25 units and 50 units 
D) greater than 50 units 
A) less than 25 units 
B) 25 units 
C) between 25 units and 50 units 
D) greater than 50 units

Question 3

A key lesson from the payroll tax is that the

Accepted Answer

A) tax is a tax solely on workers. 
B) tax is a tax solely on firms that hire workers. 
C) tax eliminates any wedge that might exist between the wage that firms pay and the wage that workers receive. 
D) true burden of a tax cannot be legislated. 
A) tax is a tax solely on workers. 
B) tax is a tax solely on firms that hire workers. 
C) tax eliminates any wedge that might exist between the wage that firms pay and the wage that workers receive. 
D) true burden of a tax cannot be legislated.

Question 4

Figure 6-18
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-18.The amount of the tax per unit is

Accepted Answer

A) $6. 
B) $8. 
C) $14. 
D) $18. 
A) $6. 
B) $8. 
C) $14. 
D) $18.

Question 5

A tax on the buyers of cameras encourages

Accepted Answer

A) sellers to supply a smaller quantity at every price. 
B) buyers to demand a smaller quantity at every price. 
C) sellers to supply a larger quantity at every price. 
D) Both a)and b)are correct. 
A) sellers to supply a smaller quantity at every price. 
B) buyers to demand a smaller quantity at every price. 
C) sellers to supply a larger quantity at every price. 
D) Both a)and b)are correct.

Question 6

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city.The mayor proposes to collect half the tax from workers and half the tax from firms.The mayor will be able to successfully divide the burden of the tax equally if the

Accepted Answer

A) demand for labor is more elastic than the supply of labor. 
B) supply of labor is more elastic than the demand for labor. 
C) demand for labor and supply of labor are equally elastic. 
D) It is not possible for the tax burden to fall equally on firms and workers. 
A) demand for labor is more elastic than the supply of labor. 
B) supply of labor is more elastic than the demand for labor. 
C) demand for labor and supply of labor are equally elastic. 
D) It is not possible for the tax burden to fall equally on firms and workers.

Question 7

​Figure 6-33
The diagram shows the effect of a tax as measured by the distance between J and K.  
-Refer to Figure 6-33.Based upon the diagram,​

Accepted Answer

A) ​more of the incidence of the tax is on buyers,since the demand curve is more elastic than the supply curve. 
B) ​more of the incidence of the tax is on sellers,since the demand curve is less elastic than is the supply curve . 
C) more of the incidence of the tax is on sellers,since supply is more inelastic than demand.​ 
D) ​more of the incidence of the tax is on buyers,since supply is more inelastic than demand. 
A) ​more of the incidence of the tax is on buyers,since the demand curve is more elastic than the supply curve. 
B) ​more of the incidence of the tax is on sellers,since the demand curve is less elastic than is the supply curve . 
C) more of the incidence of the tax is on sellers,since supply is more inelastic than demand.​ 
D) ​more of the incidence of the tax is on buyers,since supply is more inelastic than demand.

Question 8

The burden of a luxury tax falls

Accepted Answer

A) more on the rich than on the middle class. 
B) more on the poor than on the rich. 
C) more on the middle class than on the rich. 
D) equally on the rich,the middle class,and the poor. 
A) more on the rich than on the middle class. 
B) more on the poor than on the rich. 
C) more on the middle class than on the rich. 
D) equally on the rich,the middle class,and the poor.

Question 9

A tax on sellers will shift the

Accepted Answer

A) demand curve upward by the amount of the tax. 
B) demand curve downward by the amount of the tax. 
C) supply curve upward by the amount of the tax. 
D) supply curve downward by the amount of the tax. 
A) demand curve upward by the amount of the tax. 
B) demand curve downward by the amount of the tax. 
C) supply curve upward by the amount of the tax. 
D) supply curve downward by the amount of the tax.

Question 10

Suppose that in a particular market,the supply curve is highly elastic and the demand curve is highly inelastic.If a tax is imposed in this market,then the

Accepted Answer

A) buyers will bear a greater burden of the tax than the sellers. 
B) sellers will bear a greater burden of the tax than the buyers. 
C) buyers and sellers are likely to share the burden of the tax equally. 
D) buyers and sellers will not share the burden equally,but it is impossible to determine who will bear the greater burden of the tax without more information. 
A) buyers will bear a greater burden of the tax than the sellers. 
B) sellers will bear a greater burden of the tax than the buyers. 
C) buyers and sellers are likely to share the burden of the tax equally. 
D) buyers and sellers will not share the burden equally,but it is impossible to determine who will bear the greater burden of the tax without more information.

Question 11

Suppose the government imposes a $40 tax on the buyers of refrigerators.The tax would

Accepted Answer

A) shift the demand curve downward by less than $40. 
B) raise the equilibrium price by $40. 
C) create a $20 tax burden each for buyers and sellers. 
D) discourage market activity. 
A) shift the demand curve downward by less than $40. 
B) raise the equilibrium price by $40. 
C) create a $20 tax burden each for buyers and sellers. 
D) discourage market activity.

Question 12

Suppose that a tax is placed on books.If the buyers pay the majority of the tax,then we know that the

Accepted Answer

A) demand is more inelastic than the supply. 
B) supply is more inelastic than the demand. 
C) government has required that buyers remit the tax payments. 
D) government has required that sellers remit the tax payments. 
A) demand is more inelastic than the supply. 
B) supply is more inelastic than the demand. 
C) government has required that buyers remit the tax payments. 
D) government has required that sellers remit the tax payments.

Question 13

If the government levies a $5 tax per ticket on buyers of NFL game tickets,then the price paid by buyers of NFL game tickets would

Accepted Answer

A) increase by less than $5. 
B) increase by exactly $5. 
C) increase by more than $5. 
D) decrease by an indeterminate amount. 
A) increase by less than $5. 
B) increase by exactly $5. 
C) increase by more than $5. 
D) decrease by an indeterminate amount.

Question 14

Congress intended that

Accepted Answer

A) the entire FICA tax be paid by workers. 
B) the entire FICA tax be paid by firms. 
C) one-quarter of the FICA tax be paid by workers,and three-quarters be paid by firms. 
D) half the FICA tax be paid by workers,and half be paid by firms. 
A) the entire FICA tax be paid by workers. 
B) the entire FICA tax be paid by firms. 
C) one-quarter of the FICA tax be paid by workers,and three-quarters be paid by firms. 
D) half the FICA tax be paid by workers,and half be paid by firms.

Question 15

A tax on the buyers of personal computer external hard drives encourages

Accepted Answer

A) sellers to supply a smaller quantity at every price. 
B) buyers to demand a smaller quantity at every price. 
C) buyers to demand a larger quantity at every price. 
D) Both a)and b)are correct. 
A) sellers to supply a smaller quantity at every price. 
B) buyers to demand a smaller quantity at every price. 
C) buyers to demand a larger quantity at every price. 
D) Both a)and b)are correct.

Question 16

Figure 6-24  
-Refer to Figure 6-24.The price paid by buyers after the tax is imposed is

Accepted Answer

A) $24. 
B) $21. 
C) $18. 
D) $16. 
A) $24. 
B) $21. 
C) $18. 
D) $16.

Question 17

Figure 6-25  
-Refer to Figure 6-25.Suppose the same supply and demand curves apply,and a tax of the same amount per unit as shown here is imposed.Now,however,the sellers of the good,rather than the buyers,are required to pay the tax to the government.After the sellers are required to pay the tax,relative to the case depicted in the graph,the burden on buyers will be

Accepted Answer

A) larger,and the burden on sellers will be smaller. 
B) smaller,and the burden on sellers will be larger. 
C) the same,and the burden on sellers will be the same. 
D) The relative burdens in the two cases cannot be determined without further information. 
A) larger,and the burden on sellers will be smaller. 
B) smaller,and the burden on sellers will be larger. 
C) the same,and the burden on sellers will be the same. 
D) The relative burdens in the two cases cannot be determined without further information.

Question 18

Figure 6-22  
-Refer to Figure 6-22.The amount of the tax per unit is

Accepted Answer

A) $2.00. 
B) $1.50. 
C) $3.00. 
D) $0.50. 
A) $2.00. 
B) $1.50. 
C) $3.00. 
D) $0.50.

Question 19

The tax incidence

Accepted Answer

A) is the manner in which the burden of a tax is shared among participants in a market. 
B) can be shifted to the buyer by imposing the tax on the buyers of a product in a market. 
C) can be shifted to the seller by imposing the tax on the sellers of a product in a market. 
D) All of the above are correct. 
A) is the manner in which the burden of a tax is shared among participants in a market. 
B) can be shifted to the buyer by imposing the tax on the buyers of a product in a market. 
C) can be shifted to the seller by imposing the tax on the sellers of a product in a market. 
D) All of the above are correct.

Question 20

Figure 6-22  
-Refer to Figure 6-22.As the figure is drawn,who sends the tax payment to the government?

Accepted Answer

A) The buyers send the tax payment. 
B) The sellers send the tax payment. 
C) A portion of the tax payment is sent by the buyers,and the remaining portion is sent by the sellers. 
D) The question of who sends the tax payment cannot be determined from the graph. 
A) The buyers send the tax payment. 
B) The sellers send the tax payment. 
C) A portion of the tax payment is sent by the buyers,and the remaining portion is sent by the sellers. 
D) The question of who sends the tax payment cannot be determined from the graph.

Exam 6: Supply Demand and Government Policies: Taxes

Figure 6-23 -Refer to Figure 6-23.Which of the following is correct?

Figure 6-20 -Refer to Figure 6-20.Suppose a tax of $5 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

A key lesson from the payroll tax is that the

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18.The amount of the tax per unit is

A tax on the buyers of cameras encourages

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city.The mayor proposes to collect half the tax from workers and half the tax from firms.The mayor will be able to successfully divide the burden of the tax equally if the

​Figure 6-33 The diagram shows the effect of a tax as measured by the distance between J and K. -Refer to Figure 6-33.Based upon the diagram,​

The burden of a luxury tax falls

A tax on sellers will shift the

Suppose that in a particular market,the supply curve is highly elastic and the demand curve is highly inelastic.If a tax is imposed in this market,then the

Suppose the government imposes a $40 tax on the buyers of refrigerators.The tax would

Suppose that a tax is placed on books.If the buyers pay the majority of the tax,then we know that the

If the government levies a $5 tax per ticket on buyers of NFL game tickets,then the price paid by buyers of NFL game tickets would

Congress intended that

A tax on the buyers of personal computer external hard drives encourages

Figure 6-24 -Refer to Figure 6-24.The price paid by buyers after the tax is imposed is

Figure 6-22 -Refer to Figure 6-22.The amount of the tax per unit is

The tax incidence

Figure 6-22 -Refer to Figure 6-22.As the figure is drawn,who sends the tax payment to the government?

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A

Application International Trade: Part B

Figure 6-33 The diagram shows the effect of a tax as measured by the distance between J and K. -Refer to Figure 6-33.Based upon the diagram,