Exam 8: Application the Cost of Taxation: The Determinants of the Deadweight Loss

Figure 8-16 -Refer to Figure 8-16.Panel (a)and Panel (b)each illustrate a $2 tax placed on a market.In comparison to Panel (b),Panel (a)illustrates which of the following statements?

Economists generally agree that the most important tax in the U.S.economy is the

The deadweight loss from a tax of $2 per unit will be smallest in a market with

Taxes on labor encourage which of the following?

Labor taxes may distort labor markets greatly if

The deadweight loss from a $3 tax will be largest in a market with

Suppose that policymakers are considering placing a tax on either of two markets.In Market A,the tax will have a significant effect on the price consumers pay,but it will not affect equilibrium quantity very much.In Market B,the same tax will have only a small effect on the price consumers pay,but it will have a large effect on the equilibrium quantity.Other factors are held constant.In which market will the tax have a larger deadweight loss?

Suppose the government imposes a tax on cheese.The deadweight loss from this tax will likely be greater in the

Suppose a tax of $1 per unit is imposed on a good.The more elastic the supply of the good,other things equal,the

Which of the following is a tax on labor?

Assume the supply curve for cigars is a typical,upward-sloping straight line,and the demand curve for cigars is a typical,downward-sloping straight line.Suppose the equilibrium quantity in the market for cigars is 1,000 per month when there is no tax.Then a tax of $0.50 per cigar is imposed.The effective price paid by buyers increases from $1.50 to $1.90 and the effective price received by sellers falls from $1.50 to $1.40.The government's tax revenue amounts to $475 per month.Which of the following statements is correct?

Economists disagree on whether labor taxes cause small or large deadweight losses.This disagreement arises primarily because economists hold different views about

Suppose a tax of $1 per unit is imposed on a good.The more elastic the demand for the good,other things equal,

When a tax is imposed on a good for which the supply is relatively elastic and the demand is relatively inelastic,

The size of the deadweight loss generated from a tax is affected by the

Figure 8-14 -Refer to Figure 8-14.Which of the following statements is correct?

The amount of deadweight loss from a tax depends upon the

Sellers of a product will bear the larger part of the tax burden,and buyers will bear a smaller part of the tax burden,when the

Figure 8-14 -Refer to Figure 8-14.Which of the following combinations will minimize the deadweight loss from a tax?

If the labor supply curve is nearly vertical,a tax on labor