Question 1

Economists use the government's tax revenue to measure the public benefit from a tax.

Accepted Answer

A) True 
 B)False

Question 2

Figure 8-13  
-Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The amount of tax revenue collected by the government is

Accepted Answer

A)  $120. 
B)  $80. 
C)  $50. 
D)  $30. 
A)  $120. 
B)  $80. 
C)  $50. 
D)  $30.

Question 3

Figure 8-12  
-Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The tax causes the price received by sellers to

Accepted Answer

A)  decrease by $3. 
B)  increase by $2. 
C)  decrease by $1. 
D)  increase by $6. 
A)  decrease by $3. 
B)  increase by $2. 
C)  decrease by $1. 
D)  increase by $6.

Question 4

Figure 8-3
The vertical distance between points A and C represents a tax in the market.  
-Refer to Figure 8-3. The amount of tax revenue received by the government is equal to the area

Accepted Answer

A)  P3ACP1. 
B)  ABC. 
C)  P2DAP3. 
D)  P1CDP2. 
A)  P3ACP1. 
B)  ABC. 
C)  P2DAP3. 
D)  P1CDP2.

Question 5

Figure 8-6
The vertical distance between points A and B represents a tax in the market.  
-Refer to Figure 8-6. When the tax is imposed in this market, the price buyers effectively pay is

Accepted Answer

A)  $4. 
B)  $6. 
C)  $10. 
D)  $16. 
A)  $4. 
B)  $6. 
C)  $10. 
D)  $16.

Question 6

The supply curve for motor oil is the typical upward-sloping straight line, and the demand curve for motor oil is the typical downward-sloping straight line. When motor oil is taxed, the area on the relevant supply-and-demand graph that represents the deadweight loss is

Accepted Answer

A)  larger than the area that represents consumer surplus in the absence of the tax. 
B)  larger than the area that represents government's tax revenue. 
C)  a triangle. 
D)  All of the above are correct. 
A)  larger than the area that represents consumer surplus in the absence of the tax. 
B)  larger than the area that represents government's tax revenue. 
C)  a triangle. 
D)  All of the above are correct.

Question 7

Figure 8-13  
-Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The tax causes the price received by sellers to

Accepted Answer

A)  decrease by $5. 
B)  decrease by $3. 
C)  decrease by $2. 
D)  increase by $5. 
A)  decrease by $5. 
B)  decrease by $3. 
C)  decrease by $2. 
D)  increase by $5.

Question 8

In 2012, in The Wall Street Journal, economists Edward Prescott and Lee Ohanian asserted that

Accepted Answer

A)  in the United States, when the average worker earns $100 from additional work, he or she will be able to consume an additional $85 worth of goods and services. 
B)  the typical American has always worked more hours per year than the typical Frenchman and the typical German, despite vastly different tax rates in those countries. 
C)  raising tax rates from their 2012 levels would significantly reduce U.S. economic activity. 
D)  raising tax rates from their 2012 levels would significantly increase the federal government's tax revenue. 
A)  in the United States, when the average worker earns $100 from additional work, he or she will be able to consume an additional $85 worth of goods and services. 
B)  the typical American has always worked more hours per year than the typical Frenchman and the typical German, despite vastly different tax rates in those countries. 
C)  raising tax rates from their 2012 levels would significantly reduce U.S. economic activity. 
D)  raising tax rates from their 2012 levels would significantly increase the federal government's tax revenue.

Question 9

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

Accepted Answer

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

Question 10

Figure 8-2
The vertical distance between points A and B represents a tax in the market.  
-Refer to Figure 8-2. The loss of producer surplus as a result of the tax is

Accepted Answer

A)  $1. 
B)  $2. 
C)  $3. 
D)  $4. 
A)  $1. 
B)  $2. 
C)  $3. 
D)  $4.

Question 11

Figure 8-17  
-Refer to Figure 8-17. Suppose the government imposes a $1 tax in each of the four markets represented by demand curves D1, D2, D3, and D4. The deadweight will be the largest in the market represented by

Accepted Answer

A)  D1. 
B)  D2. 
C)  D3. 
D)  D4. 
A)  D1. 
B)  D2. 
C)  D3. 
D)  D4.

Question 12

If the size of a tax triples, the deadweight loss increases by a factor of six.

Accepted Answer

A) True 
 B)False

Question 13

Figure 8-26  
-Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. How much is producer surplus after the tax is imposed?

Accepted Answer

Producer surplus is

Question 14

Figure 8-25  
-Refer to Figure 8-25. How much is consumer surplus at the market equilibrium?

Accepted Answer

Consumer s

Question 15

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

Accepted Answer

Producer surplus is

Question 16

In 2012, in The Wall Street Journal, economists Peter Diamond and Emmanuel Saez wrote that, according to their analysis, the federal government's tax revenue would be maximized if the marginal income tax rate on individuals with the highest earnings were in or near the range of

Accepted Answer

A)  10 percent to 30 percent. 
B)  30 percent to 50 percent. 
C)  50 percent to 70 percent. 
D)  70 percent to 90 percent. 
A)  10 percent to 30 percent. 
B)  30 percent to 50 percent. 
C)  50 percent to 70 percent. 
D)  70 percent to 90 percent.

Question 17

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 18

What happens to the total surplus in a market when the government imposes a tax?

Accepted Answer

A)  Total surplus increases by the amount of the tax. 
B)  Total surplus increases but by less than the amount of the tax. 
C)  Total surplus decreases. 
D)  Total surplus is unaffected by the tax. 
A)  Total surplus increases by the amount of the tax. 
B)  Total surplus increases but by less than the amount of the tax. 
C)  Total surplus decreases. 
D)  Total surplus is unaffected by the tax.

Question 19

Suppose the federal government doubles the gasoline tax. The deadweight loss associated with the tax

Accepted Answer

A)  also doubles. 
B)  triples. 
C)  quadruples. 
D)  rises by a factor of 8. 
A)  also doubles. 
B)  triples. 
C)  quadruples. 
D)  rises by a factor of 8.

Question 20

Figure 8-1  
-Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by J represents

Accepted Answer

A)  consumer surplus after the tax. 
B)  consumer surplus before the tax. 
C)  producer surplus after the tax. 
D)  producer surplus before the tax. 
A)  consumer surplus after the tax. 
B)  consumer surplus before the tax. 
C)  producer surplus after the tax. 
D)  producer surplus before the tax.

Exam 8: Application: the Costs of Taxation

Economists use the government's tax revenue to measure the public benefit from a tax.

Figure 8-13 -Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The amount of tax revenue collected by the government is

Figure 8-12 -Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The tax causes the price received by sellers to

Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3. The amount of tax revenue received by the government is equal to the area

Figure 8-6 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-6. When the tax is imposed in this market, the price buyers effectively pay is

The supply curve for motor oil is the typical upward-sloping straight line, and the demand curve for motor oil is the typical downward-sloping straight line. When motor oil is taxed, the area on the relevant supply-and-demand graph that represents the deadweight loss is

Figure 8-13 -Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The tax causes the price received by sellers to

In 2012, in The Wall Street Journal, economists Edward Prescott and Lee Ohanian asserted that

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

Figure 8-2 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-2. The loss of producer surplus as a result of the tax is

Figure 8-17 -Refer to Figure 8-17. Suppose the government imposes a $1 tax in each of the four markets represented by demand curves D1, D2, D3, and D4. The deadweight will be the largest in the market represented by

If the size of a tax triples, the deadweight loss increases by a factor of six.

Figure 8-26 -Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. How much is producer surplus after the tax is imposed?

Figure 8-25 -Refer to Figure 8-25. How much is consumer surplus at the market equilibrium?

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

In 2012, in The Wall Street Journal, economists Peter Diamond and Emmanuel Saez wrote that, according to their analysis, the federal government's tax revenue would be maximized if the marginal income tax rate on individuals with the highest earnings were in or near the range of

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.

What happens to the total surplus in a market when the government imposes a tax?

Suppose the federal government doubles the gasoline tax. The deadweight loss associated with the tax

Figure 8-1 -Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by J represents

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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