Exam 8: Application: the Costs of Taxation

Figure 8-2 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-2. The amount of deadweight loss as a result of the tax is

Which of the following scenarios is consistent with the Laffer curve?

When a tax is imposed on the buyers of a good, the demand curve shifts

The Social Security tax, and to a large extent, the federal income tax, are labor taxes.

The deadweight loss of a tax rises even more rapidly than the size of the tax.

Figure 8-22 -Refer to Figure 8-22. Suppose the government initially imposes a $3 per-unit tax on this good. Now suppose the government is deciding whether to lower the tax to $1.50 or raise it to $4.50. Which of the following statements is not correct?

When a tax is imposed on buyers, consumer surplus and producer surplus both decrease.

In the early 1980s, which of the following countries had a marginal tax rate of about 80 percent?

Figure 8-4 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-4. The tax results in a loss of producer surplus that amounts to

Figure 8-10 -Refer to Figure 8-10. Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2. The price that sellers receive is

Figure 8-29 -Refer to Figure 8-29. As the size of the tax increases from $3 to $6 to $9, what happens to the deadweight loss from the tax?

In which of the following instances would the deadweight loss of the tax on airline tickets increase by a factor of 9?

If the tax on a good is tripled, the deadweight loss of the tax

Figure 8-26 -Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. How many units of this good will be bought and sold after the tax is imposed?

If a tax did not induce buyers or sellers to change their behavior, it would not cause a deadweight loss.

For a good that is taxed, the area on the relevant supply­and­demand graph that represents government's tax revenue is

Figure 8-11 -Refer to Figure 8-11. The size of the tax is represented by the

Figure 8-9 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-9. The per-unit burden of the tax on buyers is

Is the United States' labor supply more inelastic or more elastic? Briefly summarize the competing theories.

A decrease in the size of a tax is most likely to increase tax revenue in a market with