Exam 4: A : Supply and Demand: Applications and Extensions

If a $300 subsidy is legally (statutorily) granted to the buyers of computers and as a result the selling price of computers rises by $200, the actual benefit of the subsidy

The marginal tax rate is defined as

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

Which of the following would tend to increase the price of lumber?

A tax for which the average tax rate decreases with income is defined as a

A regressive tax

Suppose the demand curve for a good is highly elastic and the supply curve is highly inelastic. If the government taxes this good,

Use the figure below to answer the following question(s). Figure 4-7 -Refer to Figure 4-7. The supply curve S₁ and the demand curve D indicate initial conditions in the market for gasoline. A $.60-per-gallon excise tax on gasoline is levied. How much revenue does the $.60-per-gallon tax generate for the government?

Approximately 50,000 luxury boats (priced $100,000 or more) are currently produced each year. Using the economic way of thinking, how much revenue would the government actually generate with a $10,000 excise tax on luxury boats?

Use the figure below to answer the following question(s). Figure 4-7 -Refer to Figure 4-7. The supply curve S₁ and the demand curve D indicate initial conditions in the market for gasoline. A $.60-per-gallon excise tax on gasoline is levied, which shifts the supply curve from S₁ to S₂. Which of the following states the actual burden of the tax?

Use the figure below to answer the following question(s). Figure 4-12 -Refer to Figure 4-12. The supply curve S and the demand curve D₁ indicate initial conditions in the market for college textbooks. A new government program is implemented that grants students a $30 per textbook subsidy on every textbook they purchase, shifting the demand curve from D₁ to D₂. Which of the following is true for this subsidy given the information provided in the exhibit?

Other things constant, an increase in the demand for motorcycles will

If the demand for a good is very price elastic, the imposition of a tax on that good

Use the figure below to answer the following question(s). Figure 4-12 -Refer to Figure 4-12. The exhibit illustrates the impact of granting a subsidy on a particular good. Which of the following is true for this subsidy given the information provided in the exhibit?

The actual benefit of a government subsidy is determined primarily by

When a price floor is imposed above the equilibrium price of a commodity,

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

Suppose that a tax is placed on DVDs. If the sellers end up bearing most of the tax burden, this indicates that the

The actual incidence (or burden) of a tax refers to

Which of the following is a major disadvantage of setting the price of a good below equilibrium and using waiting in line rather than price to ration the good?