Question 1

Which of the following quantities decrease in response to a tax on a good?

Accepted Answer

A) The equilibrium quantity in the market for the good, the effective price of the good paid by buyers, and consumer surplus 
B) The equilibrium quantity in the market for the good, producer surplus, and the well-being of buyers of the good 
C) The effective price received by sellers of the good, the wedge between the effective price paid by buyers and the effective price received by sellers, and consumer surplus 
D) It depends on whether the tax is levied on buyers or on sellers. 
A) The equilibrium quantity in the market for the good, the effective price of the good paid by buyers, and consumer surplus 
B) The equilibrium quantity in the market for the good, producer surplus, and the well-being of buyers of the good 
C) The effective price received by sellers of the good, the wedge between the effective price paid by buyers and the effective price received by sellers, and consumer surplus 
D) It depends on whether the tax is levied on buyers or on sellers. B

Question 2

Total surplus is always equal to the sum of consumer surplus and producer surplus.

Accepted Answer

A) True 
 B)False  False

Question 3

Figure 8-2
The vertical distance between points C and D represents a tax in the market.
​   ​
​
​
​
-Refer to Figure 8-2. The per-unit burden of the tax on sellers is

Accepted Answer

A) $4. 
B) $6. 
C) $16. 
D) $18. 
A) $4. 
B) $6. 
C) $16. 
D) $18. A

Question 4

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

Accepted Answer

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

Question 5

Figure 8-3
The vertical distance between points A and B represents a tax in the market.  
-Refer to Figure 8-3. The deadweight loss associated with this tax amounts to

Accepted Answer

A) $80, and this figure represents the amount by which tax revenue to the government exceeds the combined loss of producer and consumer surpluses. 
B) $80, and this figure represents the surplus that is lost because the tax discourages mutually advantageous trades between buyers and sellers. 
C) $60, and this figure represents the amount by which tax revenue to the government exceeds the combined loss of producer and consumer surpluses. 
D) $60, and this figure represents the surplus that is lost because the tax discourages mutually advantageous trades between buyers and sellers. 
A) $80, and this figure represents the amount by which tax revenue to the government exceeds the combined loss of producer and consumer surpluses. 
B) $80, and this figure represents the surplus that is lost because the tax discourages mutually advantageous trades between buyers and sellers. 
C) $60, and this figure represents the amount by which tax revenue to the government exceeds the combined loss of producer and consumer surpluses. 
D) $60, and this figure represents the surplus that is lost because the tax discourages mutually advantageous trades between buyers and sellers.

Question 6

Using demand and supply diagrams, show the difference in deadweight loss between (a) a market with inelastic demand and supply and (b) a market with elastic demand and supply.

Accepted Answer

The answer of Using demand and supply diagrams, show the...

Question 7

A tax affects

Accepted Answer

A) buyers only. 
B) sellers only. 
C) buyers and sellers only. 
D) buyers, sellers, and the government. 
A) buyers only. 
B) sellers only. 
C) buyers and sellers only. 
D) buyers, sellers, and the government.

Question 8

Suppose a tax is imposed on bananas. In which of the following cases will the tax cause the equilibrium quantity of bananas to shrink by the largest amount?

Accepted Answer

A) The response of buyers to a change in the price of bananas is strong, and the response of sellers to a change in the price of bananas is weak. 
B) The response of sellers to a change in the price of bananas is strong, and the response of buyers to a change in the price of bananas is weak. 
C) The response of buyers and sellers to a change in the price of bananas is strong. 
D) The response of buyers and sellers to a change in the price of bananas is weak. 
A) The response of buyers to a change in the price of bananas is strong, and the response of sellers to a change in the price of bananas is weak. 
B) The response of sellers to a change in the price of bananas is strong, and the response of buyers to a change in the price of bananas is weak. 
C) The response of buyers and sellers to a change in the price of bananas is strong. 
D) The response of buyers and sellers to a change in the price of bananas is weak.

Question 9

Suppose that the market for product X is characterized by a typical, downward-sloping, linear demand curve and a typical, upward-sloping, linear supply curve. If a $2 tax per unit results in a deadweight loss of $200, how large would be the deadweight loss from a $6 tax per unit?

Accepted Answer

The deadweight loss will be $1

Question 10

When a tax is imposed, the loss of consumer surplus and producer surplus as a result of the tax exceeds the tax revenue collected by the government.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Figure 8-2
The vertical distance between points C and D represents a tax in the market.
​   ​
​
​
​
-Refer to Figure 8-2. The amount of the tax on each unit of the good is

Accepted Answer

A) $1. 
B) $6. 
C) $10. 
D) $4. 
A) $1. 
B) $6. 
C) $10. 
D) $4.

Question 13

Provide several examples of important taxes on labor in the United States. For a typical worker, what is the marginal tax rate on labor income once all the labor taxes are summed?

Accepted Answer

*the Social Security tax
*the

Question 14

Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes:
 $$Q ^ { D } = 200 - ( P + T )$$ If T = 40, how much is the burden of the tax on the buyers and on the sellers?

Accepted Answer

The burden of the ta

Question 15

Figure 8-10
​
   ​
-Refer to Figure 8-10. Suppose the government places a $3 tax per unit on this good. What price will sellers receive for the good after the tax is imposed?

Accepted Answer

Sellers will receive

Question 16

The demand for energy drinks is more elastic than the demand for milk. Would a tax on energy drinks or a tax on milk have a larger deadweight loss? Explain.

Accepted Answer

A tax on energy drinks would have a larg

Question 17

Figure 8-3
The vertical distance between points A and B represents a tax in the market.  
-Refer to Figure 8-3. Which of the following statements is correct?

Accepted Answer

A) Total surplus before the tax is imposed is $500. 
B) After the tax is imposed, consumer surplus is 45 percent of its pre-tax value. 
C) After the tax is imposed, producer surplus is 45 percent of its pre-tax value. 
D) Total surplus after the tax is imposed is $500. 
A) Total surplus before the tax is imposed is $500. 
B) After the tax is imposed, consumer surplus is 45 percent of its pre-tax value. 
C) After the tax is imposed, producer surplus is 45 percent of its pre-tax value. 
D) Total surplus after the tax is imposed is $500.

Question 18

Figure 8-8
​
​
 Graph (a)

Graph (b)

Graph (c)
 
 ​
​
-Refer to Figure 8-8. Which graph correctly illustrates the relationship between the size of a tax and the size of the deadweight loss associated with the tax?

Accepted Answer

A) Graph (a) 
B) Graph (b) 
C) Graph (c) 
D) Graph (d) 
A) Graph (a) 
B) Graph (b) 
C) Graph (c) 
D) Graph (d)

Question 19

Taxes drive a wedge into the market by raising the price that sellers receive and lowering the price that buyers pay.

Accepted Answer

A) True 
 B)False

Question 20

Taxes on labor tend to increase the number of hours that people choose to work.

Accepted Answer

A) True 
 B)False

Exam 8: Applications: The Costs of Taxation

Which of the following quantities decrease in response to a tax on a good?

Total surplus is always equal to the sum of consumer surplus and producer surplus.

Figure 8-2 The vertical distance between points C and D represents a tax in the market. ​ ​ ​ ​ ​ -Refer to Figure 8-2. The per-unit burden of the tax on sellers is

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

Figure 8-3 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-3. The deadweight loss associated with this tax amounts to

Using demand and supply diagrams, show the difference in deadweight loss between (a) a market with inelastic demand and supply and (b) a market with elastic demand and supply.

A tax affects

Suppose a tax is imposed on bananas. In which of the following cases will the tax cause the equilibrium quantity of bananas to shrink by the largest amount?

Suppose that the market for product X is characterized by a typical, downward-sloping, linear demand curve and a typical, upward-sloping, linear supply curve. If a $2 tax per unit results in a deadweight loss of $200, how large would be the deadweight loss from a $6 tax per unit?

When a tax is imposed, the loss of consumer surplus and producer surplus as a result of the tax exceeds the tax revenue collected by the government.

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.

Figure 8-2 The vertical distance between points C and D represents a tax in the market. ​ ​ ​ ​ ​ -Refer to Figure 8-2. The amount of the tax on each unit of the good is

Provide several examples of important taxes on labor in the United States. For a typical worker, what is the marginal tax rate on labor income once all the labor taxes are summed?

Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes: QD=200−(P+T)Q ^ { D } = 200 - ( P + T )QD=200−(P+T) If T = 40, how much is the burden of the tax on the buyers and on the sellers?

Figure 8-10 ​ ​ -Refer to Figure 8-10. Suppose the government places a $3 tax per unit on this good. What price will sellers receive for the good after the tax is imposed?

The demand for energy drinks is more elastic than the demand for milk. Would a tax on energy drinks or a tax on milk have a larger deadweight loss? Explain.

Figure 8-3 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-3. Which of the following statements is correct?

Figure 8-8 ​ ​ Graph (a) Graph (b) Graph (c) ​ ​ -Refer to Figure 8-8. Which graph correctly illustrates the relationship between the size of a tax and the size of the deadweight loss associated with the tax?

Taxes drive a wedge into the market by raising the price that sellers receive and lowering the price that buyers pay.

Taxes on labor tend to increase the number of hours that people choose to work.

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

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 Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Figure 8-2 The vertical distance between points C and D represents a tax in the market. -Refer to Figure 8-2. The per-unit burden of the tax on sellers is

Figure 8-2 The vertical distance between points C and D represents a tax in the market. -Refer to Figure 8-2. The amount of the tax on each unit of the good is

Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes: $Q ^ { D } = 200 - ( P + T )$ If T = 40, how much is the burden of the tax on the buyers and on the sellers?

Figure 8-10 -Refer to Figure 8-10. Suppose the government places a $3 tax per unit on this good. What price will sellers receive for the good after the tax is imposed?

Figure 8-8 Graph (a) Graph (b) Graph (c) -Refer to Figure 8-8. Which graph correctly illustrates the relationship between the size of a tax and the size of the deadweight loss associated with the tax?