Exam 4: Supply and Demand: Applications and Extensions

A regressive tax

Figure 4-21 Refer to Figure 4-21. The price paid by buyers after the tax is imposed is

A tax is levied on products A and B, both of which have the same price elasticity of supply. The demand for A is more inelastic than is the demand for B. Other things constant, how will this affect the incidence of an excise tax on these products?

A $10 per unit government subsidy paid directly to sellers of heaters will result in

Which of the following is true?

Figure 4-24 Refer to Figure 4-24. The per unit burden of the tax on buyers is

Use the figure below to answer the following question(s). Figure 4-10 Figure 4-10 shows the market for a good before and after an excise tax is imposed. What does the triangular area C represent?

If there was an increase in the excise tax imposed on beer suppliers, what would be the effect on the equilibrium price and quantity of beer?

When a government subsidy is granted to the buyers of a product, sellers can end up capturing some of the benefit because

Many economists believe a general sales tax (particularly on items such as food) takes a larger proportion of income from low-income households than from high-income households. If this is true, a general sales tax is a

The market pricing system corrects an excess supply by

Figure 4-21 Refer to Figure 4-21. How much tax revenue does this tax produce for the government?

Use the figure below to answer the following question(s). Figure 4-11 Refer to Figure 4-11. On the Laffer curve shown, tax revenue could be increased by

In the supply and demand model, a subsidy granted to sellers is illustrated by

About 35,000 general aviation multiengine airplanes are licensed to operate in the United States. If an additional $1,000-per-year tax was levied on each plane to raise general revenue, economic thinking suggests the

If Lex's income increases from $30,000 to $40,000 and his tax liability increases from $6,000 to $10,000, which of the following is true?

A payment the government makes to either the buyer or seller, usually on a per-unit basis, when a good or service is purchased or sold is called a

Lowincomesville, North Carolina, is a poor town. The mayor has decided to impose a law to cut all rental rates on apartments in half and to fix them at this level. Will this help the poor? Why or why not? Be sure to distinguish between the short run and the long run.

Use the figure below to answer the following question(s). Figure 4-13 Refer to Figure 4-13. The supply curve S and the demand curve D₁ indicate initial conditions in the market for flu shots. A new government program is implemented that grants buyers a $25 subsidy when they buy a flu shot, shifting the demand curve from D₁ to D₂. Which of the following is true for this subsidy given the information provided in the figure?

A subsidy on a product will generate more actual benefit for producers (and less for consumers) when