Question 1

Figure 8-9
The vertical distance between points A and C represents a tax in the market.  
-Refer to Figure 8-9. The total surplus without the tax is

Accepted Answer

A)  $8,000. 
B)  $12,000. 
C)  $20,000. 
D)  $40,000. 
A)  $8,000. 
B)  $12,000. 
C)  $20,000. 
D)  $40,000.

Question 2

Figure 8-4
The vertical distance between points A and B represents a tax in the market.  
-Refer to Figure 8-4. The per-unit burden of the tax on sellers is

Accepted Answer

A)  $7. 
B)  $5. 
C)  $4. 
D)  $3. 
A)  $7. 
B)  $5. 
C)  $4. 
D)  $3.

Question 3

Buyers of a product will bear the larger part of the tax burden, and sellers will bear a smaller part of the tax burden, when the

Accepted Answer

A)  tax is placed on the sellers of the product. 
B)  tax is placed on the buyers of the product. 
C)  supply of the product is more elastic than the demand for the product. 
D)  demand for the product is more elastic than the supply of the product. 
A)  tax is placed on the sellers of the product. 
B)  tax is placed on the buyers of the product. 
C)  supply of the product is more elastic than the demand for the product. 
D)  demand for the product is more elastic than the supply of the product.

Question 4

Figure 8-16
-Refer to Figure 8-16. Panel a) and Panel b) each illustrate a $2 tax placed on a market. In comparison to Panel b), Panel a) illustrates which of the following statements?

Accepted Answer

A)  When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic. 
B)  When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic. 
C)  When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic. 
D)  When supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic. 
A)  When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic. 
B)  When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic. 
C)  When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic. 
D)  When supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic.

Question 5

Figure 8-15
  
-Refer to Figure 8-15. Panel a) and Panel b) each illustrate a $4 tax placed on a market. In comparison to Panel a), Panel b) illustrates which of the following statements?

Accepted Answer

A)  When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic. 
B)  When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic. 
C)  When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic. 
D)  When supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic. 
A)  When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic. 
B)  When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic. 
C)  When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic. 
D)  When supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic.

Question 6

A tax is imposed on a certain good. The tax produces revenue of $5,000 for the government. The tax reduces consumer surplus by $3,000 and it reduces producer surplus by $4,000. What is the amount of the deadweight loss of the tax?

Accepted Answer

The deadweight loss

Question 7

When a country is on the downward-sloping side of the Laffer curves, a cut in the tax rate will

Accepted Answer

A)  decrease tax revenue and decrease the deadweight loss. 
B)  decrease tax revenue and increase the deadweight loss. 
C)  increase tax revenue and decrease the deadweight loss. 
D)  increase tax revenue and increase the deadweight loss. 
A)  decrease tax revenue and decrease the deadweight loss. 
B)  decrease tax revenue and increase the deadweight loss. 
C)  increase tax revenue and decrease the deadweight loss. 
D)  increase tax revenue and increase the deadweight loss.

Question 8

Consider a good to which a per-unit tax applies. The size of the deadweight that results from the tax is smaller, the

Accepted Answer

A)  larger is the price elasticity of demand. 
B)  smaller is the price elasticity of supply. 
C)  larger is the amount of the tax. 
D)  All of the above are correct. 
A)  larger is the price elasticity of demand. 
B)  smaller is the price elasticity of supply. 
C)  larger is the amount of the tax. 
D)  All of the above are correct.

Question 9

Figure 8-6
The vertical distance between points A and B represents a tax in the market.  
-Refer to Figure 8-6. Without a tax, the equilibrium price and quantity are

Accepted Answer

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

Question 10

Figure 8-19
The vertical distance between points A and B represents the original tax.  
-Refer to Figure 8-19. If the government changed the per-unit tax from $5.00 to $2.50, then the price paid by buyers would be $7.50, the price received by sellers would be $5, and the quantity sold in the market would be 1.5 units. Compared to the original tax rate, this lower tax rate would

Accepted Answer

A)  increase government revenue and increase the deadweight loss from the tax. 
B)  increase government revenue and decrease the deadweight loss from the tax. 
C)  decrease government revenue and increase the deadweight loss from the tax. 
D)  decrease government revenue and decrease the deadweight loss from the tax. 
A)  increase government revenue and increase the deadweight loss from the tax. 
B)  increase government revenue and decrease the deadweight loss from the tax. 
C)  decrease government revenue and increase the deadweight loss from the tax. 
D)  decrease government revenue and decrease the deadweight loss from the tax.

Question 11

Taxes create deadweight losses.

Accepted Answer

A) True 
 B)False

Question 12

If the tax on a good is doubled, the deadweight loss of the tax

Accepted Answer

A)  increases by 50 percent. 
B)  doubles. 
C)  triples. 
D)  quadruples. 
A)  increases by 50 percent. 
B)  doubles. 
C)  triples. 
D)  quadruples.

Question 13

Suppose a tax of $1 per unit is imposed on a good. The more elastic the supply of the good, other things equal, the

Accepted Answer

A)  smaller is the response of quantity supplied to the tax. 
B)  larger is the tax burden on sellers relative to the tax burden on buyers. 
C)  larger is the deadweight loss of the tax. 
D)  All of the above are correct. 
A)  smaller is the response of quantity supplied to the tax. 
B)  larger is the tax burden on sellers relative to the tax burden on buyers. 
C)  larger is the deadweight loss of the tax. 
D)  All of the above are correct.

Question 14

Figure 8-26  
-Refer to Figure 8-26. How much is consumer surplus at the market equilibrium?

Accepted Answer

Consumer surplus is

Question 15

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 16

Suppose the government imposes a tax on cheese. The deadweight loss from this tax will likely be greater in the

Accepted Answer

A)  first year after it is imposed than in the eighth year after it is imposed because demand and supply will be more elastic in the first year than in the eighth year. 
B)  first year after it is imposed than in the eighth year after it is imposed because demand and supply will be less elastic in the first year than in the eighth year. 
C)  eighth year after it is imposed than in the first year after it is imposed because demand and supply will be more elastic in the first year than in the eighth year. 
D)  eighth year after it is imposed than in the first year after it is imposed because demand and supply will be less elastic in the first year than in the eighth year. 
A)  first year after it is imposed than in the eighth year after it is imposed because demand and supply will be more elastic in the first year than in the eighth year. 
B)  first year after it is imposed than in the eighth year after it is imposed because demand and supply will be less elastic in the first year than in the eighth year. 
C)  eighth year after it is imposed than in the first year after it is imposed because demand and supply will be more elastic in the first year than in the eighth year. 
D)  eighth year after it is imposed than in the first year after it is imposed because demand and supply will be less elastic in the first year than in the eighth year.

Question 17

Scenario 8-3
Suppose the market demand and market supply curves are given by the equations:  
-Refer to Scenario 8-3. What are the equilibrium price and equilibrium quantity in this market?

Accepted Answer

The equilibrium pric

Question 18

The Social Security tax is a labor tax.

Accepted Answer

A) True 
 B)False

Question 19

Figure 8-9
The vertical distance between points A and C represents a tax in the market.  
-Refer to Figure 8-9. The consumer surplus without the tax is

Accepted Answer

A)  $2,000. 
B)  $5,000. 
C)  $8,000. 
D)  $16,000. 
A)  $2,000. 
B)  $5,000. 
C)  $8,000. 
D)  $16,000.

Question 20

Use the following graph shown to fill in the table that follows.

Accepted Answer

The answer of Use the following graph shown to fill...

Exam 8: Application: the Costs of Taxation

Figure 8-9 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-9. The total surplus without the tax is

Figure 8-4 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-4. The per-unit burden of the tax on sellers is

Buyers of a product will bear the larger part of the tax burden, and sellers will bear a smaller part of the tax burden, when the

Figure 8-16 -Refer to Figure 8-16. Panel a) and Panel b) each illustrate a $2 tax placed on a market. In comparison to Panel b), Panel a) illustrates which of the following statements?

Figure 8-15 -Refer to Figure 8-15. Panel a) and Panel b) each illustrate a $4 tax placed on a market. In comparison to Panel a), Panel b) illustrates which of the following statements?

A tax is imposed on a certain good. The tax produces revenue of $5,000 for the government. The tax reduces consumer surplus by $3,000 and it reduces producer surplus by $4,000. What is the amount of the deadweight loss of the tax?

When a country is on the downward-sloping side of the Laffer curves, a cut in the tax rate will

Consider a good to which a per-unit tax applies. The size of the deadweight that results from the tax is smaller, the

Figure 8-6 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-6. Without a tax, the equilibrium price and quantity are

Taxes create deadweight losses.

If the tax on a good is doubled, the deadweight loss of the tax

Suppose a tax of $1 per unit is imposed on a good. The more elastic the supply of the good, other things equal, the

Figure 8-26 -Refer to Figure 8-26. How much is consumer surplus at the market equilibrium?

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

Suppose the government imposes a tax on cheese. The deadweight loss from this tax will likely be greater in the

Scenario 8-3 Suppose the market demand and market supply curves are given by the equations: -Refer to Scenario 8-3. What are the equilibrium price and equilibrium quantity in this market?

The Social Security tax is a labor tax.

Figure 8-9 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-9. The consumer surplus without the tax is

Use the following graph shown to fill in the table that follows.

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 Macroeconomics: Basic Concepts

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

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