Question 1

Figure 8-6
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-6.Without a tax,consumer surplus in this market is

Accepted Answer

A)   $1,500.
B)   $2,400.
C)   $3,000.
D)   $3,600.E) A) and B)
F) All of the above

Question 2

Figure 8-6
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-6.When the tax is imposed in this market,sellers effectively pay what amount of the $10 tax?

Accepted Answer

A)   $0
B)   $4
C)   $6
D)   $10E) A) and D)
F) None of the above

Question 3

Figure 8-5
Suppose that the government imposes a tax of P3 - P1. 
-Refer to Figure 8-5.After the tax is levied,consumer surplus is represented by area

Accepted Answer

A)   A.
B)   A+B+C.
C)   D+H+F.
D)   F.E) B) and C)
F) A) and B)

Question 4

Deadweight loss measures the loss

Accepted Answer

A)   in a market to buyers and sellers that is not offset by an increase in government revenue.
B)   in revenue to the government when buyers choose to buy less of the product because of the tax.
C)   of equality in a market due to government intervention.
D)   of total revenue to business firms due to the price wedge caused by the tax.E) B) and D)
F) B) and C)

Question 5

Figure 8-3
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-3.Which of the following equations is valid for the tax revenue that the tax provides to the government?

Accepted Answer

A)   Tax revenue = (P2 - P1) xQ1
B)   Tax revenue = (P3 - P1) xQ1
C)   Tax revenue = (P3 - P2) xQ1
D)   Tax revenue = (P3 - P1) x(Q2 - Q1) E) B) and D)
F) C) and D)

Question 6

As the price elasticities of supply and demand increase,the deadweight loss from a tax increases.

Accepted Answer

A) True 
 B)False

Question 7

The benefit that government receives from a tax is measured by

Accepted Answer

A)   deadweight loss.
B)   consumer surplus.
C)   tax incidence.
D)   tax revenue.E) A) and B)
F) A) and C)

Question 8

Scenario 8-1
Suppose the market demand and market supply curves are given by the equations: 
-Refer to Scenario 8-1.What are the equilibrium price and equilibrium quantity in this market?

Accepted Answer

The equilibrium pric...

Question 9

The Social Security tax is a labor tax.

Accepted Answer

A) True 
 B)False

Question 10

Figure 8-1 
-Refer to Figure 8-1.Suppose a $3 per-unit tax is placed on this good.The tax causes the price received by sellers to

Accepted Answer

A)   decrease by $3.
B)   increase by $2.
C)   decrease by $1.
D)   increase by $6.E) None of the above
F) A) and D)

Question 11

Figure 8-5
Suppose that the government imposes a tax of P3 - P1. 
-Refer to Figure 8-5.The loss in total welfare that results from the tax is represented by area

Accepted Answer

A)   A+B+D+F.
B)   A+B+C.
C)   D+H+F.
D)   C+H.E) B) and C)
F) A) and D)

Question 12

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

Accepted Answer

A)   $45.
B)   $90.
C)   $210.
D)   $255.E) A) and D)
F) All of the above

Question 13

Figure 8-3
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-3.The equilibrium price before the tax is imposed is

Accepted Answer

A)   P1.
B)   P2.
C)   P3.
D)   P4.E) B) and C)
F) None of the above

Question 14

When a tax is imposed on sellers,producer surplus decreases but consumer surplus increases.

Accepted Answer

A) True 
 B)False

Question 15

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 buyers pay is

Accepted Answer

A)   P0.
B)   P2.
C)   P5.
D)   P8.E) None of the above
F) All of the above

Question 16

Use the following graph shown to fill in the table that follows.

Accepted Answer

The answer of Use the following graph shown to fill...

Question 17

Figure 8-15 
-Refer to Figure 8-15.Suppose the government imposes a $1 tax in each of the four markets represented by demand curves D1,D2,D3,and D4.The deadweight will be the smallest in the market represented by

Accepted Answer

A)   D1.
B)   D2.
C)   D3.
D)   D4.E) A) and B)
F) A) and C)

Question 18

Table 8-1
 
-Refer to Table 8-1.Suppose the government is considering levying a tax in one or more of the markets described in the table.Which of the markets will maximize the deadweight loss(es) from the tax?

Accepted Answer

A)   market B only
B)   markets A and C only
C)   markets B and D only
D)   market D onlyE) None of the above
F) All of the above

Question 19

Figure 8-5
Suppose that the government imposes a tax of P3 - P1. 
-Refer to Figure 8-5.The benefit to the government is measured by

Accepted Answer

A)   tax revenue and is represented by area A+B.
B)   tax revenue and is represented by area B+D.
C)   the net gain in total surplus and is represented by area B+D.
D)   the net gain in total surplus and is represented by area C+H.E) B) and D)
F) A) and B)

Question 20

Suppose a tax is imposed on the sellers of fast-food French fries.The burden of the tax will

Accepted Answer

A)   fall entirely on the buyers of fast-food French fries.
B)   fall entirely on the sellers of fast-food French fries.
C)   be shared equally by the buyers and sellers of fast-food French fries.
D)   be shared by the buyers and sellers of fast-food French fries but not necessarily equally.E) C) and D)
F) B) and C)

Exam 8: Application: The Costs of Taxation

Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3.Which of the following equations is valid for the tax revenue that the tax provides to the government?

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Figure 8-15 -Refer to Figure 8-15.Suppose the government imposes a $1 tax in each of the four markets represented by demand curves D1,D2,D3,and D4.The deadweight will be the smallest in the market represented by

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Deadweight loss measures the loss

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The Social Security tax is a labor tax.

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Figure 8-1 -Refer to Figure 8-1.Suppose a $3 per-unit tax is placed on this good.The tax causes the price received by sellers to

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Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.The benefit to the government is measured by

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As the price elasticities of supply and demand increase,the deadweight loss from a tax increases.

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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

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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 buyers pay is

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Scenario 8-1 Suppose the market demand and market supply curves are given by the equations: -Refer to Scenario 8-1.What are the equilibrium price and equilibrium quantity in this market?

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Figure 8-6 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-6.Without a tax,consumer surplus in this market is

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The benefit that government receives from a tax is measured by

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Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.After the tax is levied,consumer surplus is represented by area

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Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.The loss in total welfare that results from the tax is represented by area

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When a tax is imposed on sellers,producer surplus decreases but consumer surplus increases.

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Figure 8-6 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-6.When the tax is imposed in this market,sellers effectively pay what amount of the $10 tax?

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Table 8-1 -Refer to Table 8-1.Suppose the government is considering levying a tax in one or more of the markets described in the table.Which of the markets will maximize the deadweight loss(es) from the tax?

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Suppose a tax is imposed on the sellers of fast-food French fries.The burden of the tax will

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Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3.The equilibrium price before the tax is imposed is

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Use the following graph shown to fill in the table that follows.

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The equilibrium pric...
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