Question 1

If a tax is levied on the buyers of dog food,then

Accepted Answer

A) buyers will bear the entire burden of the tax. 
B) sellers will bear the entire burden of the tax. 
C) buyers and sellers will share the burden of the tax. 
D) the government will bear the entire burden of the tax. 
A) buyers will bear the entire burden of the tax. 
B) sellers will bear the entire burden of the tax. 
C) buyers and sellers will share the burden of the tax. 
D) the government will bear the entire burden of the tax.

Question 2

Figure 6-24  
-Refer to Figure 6-24.Suppose sellers,rather than buyers,were required to pay this tax (in the same amount per unit as shown in the graph).Relative to the tax on buyers,the tax on sellers would result in

Accepted Answer

A) buyers bearing the same share of the tax burden. 
B) sellers bearing the same share of the tax burden. 
C) the same amount of tax revenue for the government. 
D) All of the above are correct. 
A) buyers bearing the same share of the tax burden. 
B) sellers bearing the same share of the tax burden. 
C) the same amount of tax revenue for the government. 
D) All of the above are correct.

Question 3

Figure 6-24  
-Refer to Figure 6-24.In the after-tax equilibrium,government collects

Accepted Answer

A) $1,440 in tax revenue;of this amount,$960 represents a burden on buyers and $480 represents a burden on sellers. 
B) $1,440 in tax revenue;of this amount,$720 represents a burden on buyers and $720 represents a burden on sellers. 
C) $1,680 in tax revenue;of this amount,$1,260 represents a burden on buyers and $420 represents a burden on sellers. 
D) $1,680 in tax revenue;of this amount,$840 represents a burden on buyers and $840 represents a burden on sellers. 
A) $1,440 in tax revenue;of this amount,$960 represents a burden on buyers and $480 represents a burden on sellers. 
B) $1,440 in tax revenue;of this amount,$720 represents a burden on buyers and $720 represents a burden on sellers. 
C) $1,680 in tax revenue;of this amount,$1,260 represents a burden on buyers and $420 represents a burden on sellers. 
D) $1,680 in tax revenue;of this amount,$840 represents a burden on buyers and $840 represents a burden on sellers.

Question 4

The quantity sold in a market will decrease if the government decreases a

Accepted Answer

A) binding price floor in that market. 
B) binding price ceiling in that market. 
C) tax on the good sold in that market. 
D) All of the above are correct. 
A) binding price floor in that market. 
B) binding price ceiling in that market. 
C) tax on the good sold in that market. 
D) All of the above are correct.

Question 5

If the government wants to reduce smoking,it should impose a tax on

Accepted Answer

A) buyers of cigarettes. 
B) sellers of cigarettes. 
C) either buyers or sellers of cigarettes. 
D) whichever side of the market is less elastic. 
A) buyers of cigarettes. 
B) sellers of cigarettes. 
C) either buyers or sellers of cigarettes. 
D) whichever side of the market is less elastic.

Question 6

Which of the following is not correct?

Accepted Answer

A) Taxes levied on sellers and taxes levied on buyers are not equivalent. 
B) A tax places a wedge between the price that buyers pay and the price that sellers receive. 
C) The wedge between the buyers' price and the sellers' price is the same,regardless of whether the tax is levied on buyers or sellers. 
D) In the new after-tax equilibrium,buyers and sellers share the burden of the tax. 
A) Taxes levied on sellers and taxes levied on buyers are not equivalent. 
B) A tax places a wedge between the price that buyers pay and the price that sellers receive. 
C) The wedge between the buyers' price and the sellers' price is the same,regardless of whether the tax is levied on buyers or sellers. 
D) In the new after-tax equilibrium,buyers and sellers share the burden of the tax.

Question 7

Figure 6-21  
-Refer to Figure 6-21.In the after-tax equilibrium,how much revenue does the government collect from the tax on this good?

Accepted Answer

A) $210 
B) $345 
C) $420 
D) $480 
A) $210 
B) $345 
C) $420 
D) $480

Question 8

If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell,then

Accepted Answer

A) the supply curve for mopeds shifts downward by $200. 
B) sellers of mopeds receive $200 less per moped than they were receiving before the tax. 
C) buyers of mopeds are unaffected by the tax. 
D) None of the above is correct. 
A) the supply curve for mopeds shifts downward by $200. 
B) sellers of mopeds receive $200 less per moped than they were receiving before the tax. 
C) buyers of mopeds are unaffected by the tax. 
D) None of the above is correct.

Question 9

Tax incidence

Accepted Answer

A) depends on the legislated burden. 
B) is entirely random. 
C) depends on the elasticities of supply and demand. 
D) falls entirely on buyers or entirely on sellers. 
A) depends on the legislated burden. 
B) is entirely random. 
C) depends on the elasticities of supply and demand. 
D) falls entirely on buyers or entirely on sellers.

Question 10

Figure 6-19  
-Refer to Figure 6-19.Suppose a tax of $2 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

Accepted Answer

A) less than 50 units 
B) 50 units 
C) between 50 units and 100 units 
D) greater than 100 units 
A) less than 50 units 
B) 50 units 
C) between 50 units and 100 units 
D) greater than 100 units

Question 11

Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum.The tax would

Accepted Answer

A) shift the supply curve upward by less than 50 cents. 
B) raise the equilibrium price by 50 cents. 
C) create a 50-cent tax burden each for buyers and sellers. 
D) discourage market activity. 
A) shift the supply curve upward by less than 50 cents. 
B) raise the equilibrium price by 50 cents. 
C) create a 50-cent tax burden each for buyers and sellers. 
D) discourage market activity.

Question 12

A tax imposed on the buyers of a good will lower the

Accepted Answer

A) price paid by buyers and lower the equilibrium quantity. 
B) price paid by buyers and raise the equilibrium quantity. 
C) effective price received by sellers and lower the equilibrium quantity. 
D) effective price received by sellers and raise the equilibrium quantity. 
A) price paid by buyers and lower the equilibrium quantity. 
B) price paid by buyers and raise the equilibrium quantity. 
C) effective price received by sellers and lower the equilibrium quantity. 
D) effective price received by sellers and raise the equilibrium quantity.

Question 13

Figure 6-26  
-Refer to Figure 6-26.How much tax revenue does this tax produce for the government?

Accepted Answer

A) $480 
B) $640 
C) $360 
D) $120 
A) $480 
B) $640 
C) $360 
D) $120

Question 14

Suppose that the demand for digital cameras is elastic,and the supply of digital cameras is inelastic.A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

Accepted Answer

A) less than $10. 
B) $10. 
C) between $10 and $20. 
D) $20. 
A) less than $10. 
B) $10. 
C) between $10 and $20. 
D) $20.

Question 15

​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) ​the incidence of the tax falls more heavily on buyers. 
B) ​the incidence of the tax falls more heavily on sellers. 
C) ​the incidence of the tax is shared equally by both buyers and sellers. 
D) ​the incidence of the tax cannot be determined based upon the information in the diagram. 
A) ​the incidence of the tax falls more heavily on buyers. 
B) ​the incidence of the tax falls more heavily on sellers. 
C) ​the incidence of the tax is shared equally by both buyers and sellers. 
D) ​the incidence of the tax cannot be determined based upon the information in the diagram.

Question 16

If a tax is levied on the buyers of a product,then the supply curve will

Accepted Answer

A) not shift. 
B) shift up. 
C) shift down. 
D) become flatter. 
A) not shift. 
B) shift up. 
C) shift down. 
D) become flatter.

Question 17

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.Workers will bear

Accepted Answer

A) an equal share of the tax in comparison to firms. 
B) a greater share of the tax in comparison to firms. 
C) a smaller share of the tax in comparison to firms. 
D) All of the above are possible. 
A) an equal share of the tax in comparison to firms. 
B) a greater share of the tax in comparison to firms. 
C) a smaller share of the tax in comparison to firms. 
D) All of the above are possible.

Question 18

The price paid by buyers in a market will decrease if the government

Accepted Answer

A) imposes a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) increases a tax on the good sold in that market. 
D) decreases a binding price floor in that market. 
A) imposes a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) increases a tax on the good sold in that market. 
D) decreases a binding price floor in that market.

Question 19

When a tax is placed on the sellers of a product,buyers pay

Accepted Answer

A) more,and sellers receive more than they did before the tax. 
B) more,and sellers receive less than they did before the tax. 
C) less,and sellers receive more than they did before the tax. 
D) less,and sellers receive less than they did before the tax. 
A) more,and sellers receive more than they did before the tax. 
B) more,and sellers receive less than they did before the tax. 
C) less,and sellers receive more than they did before the tax. 
D) less,and sellers receive less than they did before the tax.

Question 20

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell.Further,suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle.Which of the following statements is correct?

Accepted Answer

A) This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor. 
B) The effective price received by sellers is $5.00 per bottle less than it was before the tax. 
C) Forty percent of the burden of the tax falls on buyers. 
D) All of the above are correct. 
A) This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor. 
B) The effective price received by sellers is $5.00 per bottle less than it was before the tax. 
C) Forty percent of the burden of the tax falls on buyers. 
D) All of the above are correct.

Exam 6: Supply Demand and Government Policies: Taxes

If a tax is levied on the buyers of dog food,then

Figure 6-24 -Refer to Figure 6-24.Suppose sellers,rather than buyers,were required to pay this tax (in the same amount per unit as shown in the graph).Relative to the tax on buyers,the tax on sellers would result in

Figure 6-24 -Refer to Figure 6-24.In the after-tax equilibrium,government collects

The quantity sold in a market will decrease if the government decreases a

If the government wants to reduce smoking,it should impose a tax on

Which of the following is not correct?

Figure 6-21 -Refer to Figure 6-21.In the after-tax equilibrium,how much revenue does the government collect from the tax on this good?

If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell,then

Tax incidence

Figure 6-19 -Refer to Figure 6-19.Suppose a tax of $2 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum.The tax would

A tax imposed on the buyers of a good will lower the

Figure 6-26 -Refer to Figure 6-26.How much tax revenue does this tax produce for the government?

Suppose that the demand for digital cameras is elastic,and the supply of digital cameras is inelastic.A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

​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,

If a tax is levied on the buyers of a product,then the supply curve will

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.Workers will bear

The price paid by buyers in a market will decrease if the government

When a tax is placed on the sellers of a product,buyers pay

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell.Further,suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle.Which of the following statements is correct?

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

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,