Exam 4: Supply and Demand: Applications and Extensions

Currently, federal and state gasoline taxes (imposed statutorily on the sellers of gasoline) amount to about $.45 per gallon. Suppose the current price of gasoline is $1.20 per gallon, and that if the tax was not in place, the price would be only $.80.

Whenever a shortage occurs (for example, in parking spaces), and the price does not rise or is not permitted to rise, some method of non-price rationing must occur (for example, driving around looking for a parking space). Which of the following is an advantage of price rationing relative to non-price rationing methods?

Figure 4-25 Refer to Figure 4-25. After the tax is levied, producer surplus is represented by area

A law establishing a minimum legal price for a good or service (the minimum wage for example) is known as

If a government price control succeeds in affecting price, it can be expected to lead to a corresponding

Use the table below to choose the correct answer. The tax schedule shown here is

If a household has $40,000 in taxable income and its tax liability is $10,000, the household's average tax rate is

In the two decades following 1990, subsidized federal loans per full-time student more than tripled. Economic analysis indicates that this expansion in subsidies

If political officials want to minimize the excess burden accompanying a tax, they should set the tax at a rate

The actual burden of a tax

An income tax is defined as regressive if

An income tax is proportional if

Under rent control, tenants can expect

Which of the following would tend to increase the wage of coal miners?

If Heather's tax liability increases from $10,000 to $16,000 when her income increases from $30,000 to $40,000, her marginal tax rate is

Use the figure below to answer the following question(s). Figure 4-10 Refer to Figure 4-10. The accompanying graph shows the market for a good before and after an excise tax is imposed. The total tax revenue generated is indicated by

A tax tends to

A price floor that sets the price of a good above market equilibrium will cause

Use the figure below to answer the following question(s). Figure 4-8 Refer to Figure 4-8. The supply curve S ₁ and the demand curve D indicate initial conditions in the market for soft coal. A $40-per-ton tax on soft coal is levied, shifting the supply curve from S ₁ to S ₂. Imposing the tax increases the equilibrium price of soft coal from

Use the figure below illustrating the impact of an excise tax to answer the following question(s). Figure 4-6 The revenue generated by the tax illustrated in Figure 4-6 is given by the area