Question 1

Exhibit 5-32  
-Refer to Exhibit 5-32. The tax burden borne by producers is:

Accepted Answer

A)  $5.50 
B)  $9.50 
C)  $14.50 
D)  $19.50 
E)  $20.50 
A)  $5.50 
B)  $9.50 
C)  $14.50 
D)  $19.50 
E)  $20.50

Question 2

Exhibit 5-31  
-Refer to Exhibit 5-31. The tax burden borne by sellers is:

Accepted Answer

A)  P3DCP1 
B)  P2BDP3 
C)  Q2CAQ1 
D)  b and c 
E)  P2BCP1 
A)  P3DCP1 
B)  P2BDP3 
C)  Q2CAQ1 
D)  b and c 
E)  P2BCP1

Question 3

If demand is more inelastic than supply is, the

Accepted Answer

A)  larger the portion of the tax that will be paid by producers 
B)  larger the portion of the tax that will be paid by consumers 
C)  more likely it is that the tax will be spread equally between producers and consumers 
D)  smaller the portion of the tax that will be paid by consumers 
E)  smaller the impact that an income tax will have on consumer preferences 
A)  larger the portion of the tax that will be paid by producers 
B)  larger the portion of the tax that will be paid by consumers 
C)  more likely it is that the tax will be spread equally between producers and consumers 
D)  smaller the portion of the tax that will be paid by consumers 
E)  smaller the impact that an income tax will have on consumer preferences

Question 4

Exhibit 5-32  
-Refer to Exhibit 5-32. The revenue generated by the $12.50 tax is:

Accepted Answer

A)  $12.50 
B)  $25.00 
C)  $37.50 
D)  $62.60 
E)  $87.50 
A)  $12.50 
B)  $25.00 
C)  $37.50 
D)  $62.60 
E)  $87.50

Question 5

If demand is elastic, a tax increase will shift the demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 6

If supply is more elastic than demand is, the

Accepted Answer

A)  less the impact it will have on the consumers before tax income 
B)  more likely it is to lead to tax avoidance 
C)  less likely it will have any impact on market transactions 
D)  more the tax will fall on consumers 
E)  more the tax will fall on producers 
A)  less the impact it will have on the consumers before tax income 
B)  more likely it is to lead to tax avoidance 
C)  less likely it will have any impact on market transactions 
D)  more the tax will fall on consumers 
E)  more the tax will fall on producers

Question 7

The more elastic is the supply, the less of a tax is paid by consumers

Accepted Answer

A) True 
 B)False

Question 8

Levying a tax on a good when demand is very inelastic will generate a large amount of tax revenue for the government.

Accepted Answer

A) True 
 B)False

Question 9

The more inelastic the supply, the less of a tax is paid by producers

Accepted Answer

A) True 
 B)False

Question 10

Historically salt has been one of the most commonly taxed items. Which of the following do you think best explains this fact?

Accepted Answer

A)  Since salt is a necessity, levying a tax on it imposed a hardship on no one 
B)  The burden of the tax will be shared by everyone since everyone uses salt 
C)  Because salt is used more by those with higher incomes, a tax will decrease their consumption 
D)  The demand for salt is inelastic 
E)  The demand for salt is elastic 
A)  Since salt is a necessity, levying a tax on it imposed a hardship on no one 
B)  The burden of the tax will be shared by everyone since everyone uses salt 
C)  Because salt is used more by those with higher incomes, a tax will decrease their consumption 
D)  The demand for salt is inelastic 
E)  The demand for salt is elastic

Question 11

If supply is inelastic, the imposition of a tax will

Accepted Answer

A)  fall more heavily on producers 
B)  fall more heavily on consumers 
C)  fall more heavily on profit making firms relative to non-profit firms 
D)  be equally distributed between buyers and sellers 
E)  change consumer expectations because they do not know what sellers will do 
A)  fall more heavily on producers 
B)  fall more heavily on consumers 
C)  fall more heavily on profit making firms relative to non-profit firms 
D)  be equally distributed between buyers and sellers 
E)  change consumer expectations because they do not know what sellers will do

Question 12

For which of the following goods would you expect the demand to be most price elastic?

Accepted Answer

A)  Cigarettes 
B)  Meat 
C)  Vegetables 
D)  Beer 
E)  Coors Lite Beer 
A)  Cigarettes 
B)  Meat 
C)  Vegetables 
D)  Beer 
E)  Coors Lite Beer

Exhibit 5-32 -Refer to Exhibit 5-32. The tax burden borne by producers is:

Exhibit 5-31 -Refer to Exhibit 5-31. The tax burden borne by sellers is:

If demand is more inelastic than supply is, the

Exhibit 5-32 -Refer to Exhibit 5-32. The revenue generated by the $12.50 tax is:

If demand is elastic, a tax increase will shift the demand curve to the right.

If supply is more elastic than demand is, the

The more elastic is the supply, the less of a tax is paid by consumers

Levying a tax on a good when demand is very inelastic will generate a large amount of tax revenue for the government.

The more inelastic the supply, the less of a tax is paid by producers

Historically salt has been one of the most commonly taxed items. Which of the following do you think best explains this fact?

If supply is inelastic, the imposition of a tax will

For which of the following goods would you expect the demand to be most price elastic?

The Art and Science of Economic Analysis

Appendix: Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Consumer Choice and Demand

Appendix: Indifference Curves and Utility Maximization

Production and Cost in the Firm

Appendix: a Closer Look at Production and Cost

A: perfect Competition

B: perfect Competition

A: monopoly

B: Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters

Exam 5: Appendix: price Elasticity and Tax Incidence

Exhibit 5-32 -Refer to Exhibit 5-32. The tax burden borne by producers is:

Exhibit 5-31 -Refer to Exhibit 5-31. The tax burden borne by sellers is:

If demand is more inelastic than supply is, the

Exhibit 5-32 -Refer to Exhibit 5-32. The revenue generated by the $12.50 tax is:

If demand is elastic, a tax increase will shift the demand curve to the right.

If supply is more elastic than demand is, the

The more elastic is the supply, the less of a tax is paid by consumers

Levying a tax on a good when demand is very inelastic will generate a large amount of tax revenue for the government.

The more inelastic the supply, the less of a tax is paid by producers

Historically salt has been one of the most commonly taxed items. Which of the following do you think best explains this fact?

If supply is inelastic, the imposition of a tax will

For which of the following goods would you expect the demand to be most price elastic?

The Art and Science of Economic Analysis

Appendix: Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Consumer Choice and Demand

Appendix: Indifference Curves and Utility Maximization

Production and Cost in the Firm

Appendix: a Closer Look at Production and Cost

A: perfect Competition

B: perfect Competition

A: monopoly

B: Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters