Question 1

Taxes on labor encourage all of the following except

Accepted Answer

A)   older workers to take early retirement from the labor force.
B)   mothers to stay at home rather than work in the labor force.
C)   workers to work overtime.
D)   people to be paid "under the table."E) A) and B)
F) B) and C)

Question 2

The view held by Arthur Laffer and Ronald Reagan that cuts in tax rates would encourage people to increase the quantity of labor they supplied became known as

Accepted Answer

A)   California economics.
B)   welfare economics.
C)   supply-side economics.
D)   elasticity economics.E) B) and C)
F) None of the above

Question 3

To measure the gains and losses from a tax on a good,economists use the tools of

Accepted Answer

A)   macroeconomics.
B)   welfare economics.
C)   international-trade theory.
D)   circular-flow analysis.E) A) and B)
F) A) and C)

Question 4

The less freedom people are given to choose the date of their retirement,the

Accepted Answer

A)   more elastic is the supply of labor.
B)   less elastic is the supply of labor.
C)   flatter is the labor supply curve.
D)   smaller is the decrease in employment that will result from a tax on labor.E) A) and B)
F) A) and C)

Question 5

The higher a country's tax rates,the more likely that country will be

Accepted Answer

A)   at the top of the Laffer curve.
B)   on the positively sloped part of the Laffer curve.
C)   on the negatively sloped part of the Laffer curve.
D)   experiencing small deadweight losses.E) None of the above
F) All of the above

Question 6

Relative to a situation in which gasoline is not taxed,the imposition of a tax on gasoline causes the quantity of gasoline demanded to

Accepted Answer

A)   decrease and the quantity of gasoline supplied to decrease.
B)   decrease and the quantity of gasoline supplied to increase.
C)   increase and the quantity of gasoline supplied to decrease.
D)   increase and the quantity of gasoline supplied to increase.E) A) and B)
F) None of the above

Question 7

Figure 8-20. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax.
 
-Refer to Figure 8-20.For an economy that is currently at point D on the curve,a decrease in the tax rate would

Accepted Answer

A)   decrease consumer surplus.
B)   decrease producer surplus.
C)   increase tax revenue.
D)   increase the deadweight loss of the tax.E) A) and C)
F) A) and D)

Question 8

Figure 8-1
 
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The consumer surplus after the tax is measured by the area

Accepted Answer

A)   J+K+I.
B)   J.
C)   M.
D)   L+M+Y.E) C) and D)
F) B) and D)

Question 9

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

Accepted Answer

A)   the larger is the decrease in quantity demanded as a result of the tax.
B)   the smaller is the tax burden on buyers relative to the tax burden on sellers.
C)   the larger is the deadweight loss of the tax.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 10

Figure 8-9
The vertical distance between points A and C represent a tax in the market.
 
-Refer to Figure 8-9.The amount of tax revenue received by the government is

Accepted Answer

A)   $4,000.
B)   $6,000.
C)   $10,000.
D)   $24,000.E) A) and C)
F) None of the above

Question 11

Suppose a tax of $5 per unit is imposed on a good,and the tax causes the equilibrium quantity of the good to decrease from 200 units to 100 units.The tax decreases consumer surplus by $450 and decreases producer surplus by $300.The deadweight loss from the tax is

Accepted Answer

A)   $250.
B)   $500.
C)   $750.
D)   $1,000.E) A) and B)
F) All of the above

Question 12

Figure 8-1
 
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by J+K+L+M represents

Accepted Answer

A)   total surplus after the tax.
B)   total surplus before the tax.
C)   deadweight loss from the tax.
D)   tax revenue.E) C) and D)
F) A) and B)

Question 13

When a tax is levied on a good,the buyers and sellers of the good share the burden,

Accepted Answer

A)   provided the tax is levied on the sellers.
B)   provided the tax is levied on the buyers.
C)   provided a portion of the tax is levied on the buyers, with the remaining portion levied on the sellers.
D)   regardless of how the tax is levied.E) A) and B)
F) C) and D)

Question 14

Figure 8-6
The vertical distance between points A and B represents a tax in the market.
 
-Refer to Figure 8-6.The amount of the tax on each unit of the good is

Accepted Answer

A)   $6.
B)   $8.
C)   $10.
D)   $12.E) B) and C)
F) A) and D)

Question 15

Scenario 8-1
Erin would be willing to pay as much as $100 per week to have her house cleaned. Ernesto's opportunity cost of cleaning Erin's house is $70 per week.
-Refer to Scenario 8-1.Assume Erin is required to pay a tax of $40 when she hires someone to clean her house for a week.Which of the following is correct?

Accepted Answer

A)   Erin will now clean her own house.
B)   Ernesto will continue to clean Erin's house, but his producer surplus will decline.
C)   Total economic welfare (consumer surplus plus producer surplus plus tax revenue)  will increase.
D)   Erin will continue to hire Ernesto to clean her house, but her consumer surplus will decline.E) B) and C)
F) C) and D)

Question 16

Figure 8-5
Suppose that the government imposes a tax of P3 - P1.
 
-Refer to Figure 8-5.The price that buyers effectively pay after the tax is imposed is

Accepted Answer

A)   P1.
B)   P2.
C)   P3.
D)   P4.E) A) and B)
F) C) and D)

Question 17

Figure 8-6
The vertical distance between points A and B represents a tax in the market.
 
-Refer to Figure 8-6.What happens to total surplus in this market when the tax is imposed?

Accepted Answer

A)   Total surplus increases by $1,500.
B)   Total surplus increases by $3,000.
C)   Total surplus decreases by $1,500.
D)   Total surplus decreases by $,3000.E) A) and C)
F) All of the above

Question 18

Taxes cause deadweight losses because they prevent buyers and sellers from realizing some of the gains from trade.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)   tax is placed on the sellers of the product.
B)   tax is placed on the buyers of the product.
C)   supply of the product is more elastic than the demand for the product.
D)   demand for the product is more elastic than the supply of the product.E) All of the above
F) A) and B)

Question 20

Figure 8-7
The vertical distance between points A and B represents a tax in the market.
 
-Refer to Figure 8-7.As a result of the tax,consumer surplus decreases by

Accepted Answer

A)   $65, producer surplus decreases by $85, tax revenue is $120, and deadweight loss is $30.
B)   $75, producer surplus decreases by $75, tax revenue is $120, and deadweight loss is $30.
C)   $80, producer surplus decreases by $80, tax revenue is $120, and deadweight loss is $40.
D)   $120, producer surplus decreases by $120, tax revenue is $200, and deadweight loss is $40.E) B) and D)
F) None of the above

Exam 8: Application: The Costs of Taxation.

Figure 8-1 -Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by J+K+L+M represents

Correct Answer
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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.What happens to total surplus in this market when the tax is imposed?

Correct Answer
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To measure the gains and losses from a tax on a good,economists use the tools of

Correct Answer
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Figure 8-20. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. -Refer to Figure 8-20.For an economy that is currently at point D on the curve,a decrease in the tax rate would

Correct Answer
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Figure 8-9 The vertical distance between points A and C represent a tax in the market. -Refer to Figure 8-9.The amount of tax revenue received by the government is

Correct Answer
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Figure 8-7 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-7.As a result of the tax,consumer surplus decreases by

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

Correct Answer
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Taxes cause deadweight losses because they prevent buyers and sellers from realizing some of the gains from trade.

Correct Answer
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Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.The price that buyers effectively pay after the tax is imposed is

Correct Answer
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The higher a country's tax rates,the more likely that country will be

Correct Answer
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The view held by Arthur Laffer and Ronald Reagan that cuts in tax rates would encourage people to increase the quantity of labor they supplied became known as

Correct Answer
verified

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

Correct Answer
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Relative to a situation in which gasoline is not taxed,the imposition of a tax on gasoline causes the quantity of gasoline demanded to

Correct Answer
verified

Figure 8-1 -Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The consumer surplus after the tax is measured by the area

Correct Answer
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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.The amount of the tax on each unit of the good is

Correct Answer
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The less freedom people are given to choose the date of their retirement,the

Correct Answer
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Suppose a tax of $5 per unit is imposed on a good,and the tax causes the equilibrium quantity of the good to decrease from 200 units to 100 units.The tax decreases consumer surplus by $450 and decreases producer surplus by $300.The deadweight loss from the tax is

Correct Answer
verified

Taxes on labor encourage all of the following except

Correct Answer
verified

When a tax is levied on a good,the buyers and sellers of the good share the burden,

Correct Answer
verified

Exam 8: Application: The Costs of Taxation.

Figure 8-1 -Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by J+K+L+M represents

Correct AnswerverifiedShow Answer

Figure 8-6 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-6.What happens to total surplus in this market when the tax is imposed?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

To measure the gains and losses from a tax on a good,economists use the tools of

Correct AnswerverifiedShow Answer

Figure 8-20. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. -Refer to Figure 8-20.For an economy that is currently at point D on the curve,a decrease in the tax rate would

Correct AnswerverifiedShow Answer

Figure 8-9 The vertical distance between points A and C represent a tax in the market. -Refer to Figure 8-9.The amount of tax revenue received by the government is

Correct AnswerverifiedShow Answer

Figure 8-7 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-7.As a result of the tax,consumer surplus decreases by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Taxes cause deadweight losses because they prevent buyers and sellers from realizing some of the gains from trade.

Correct AnswerverifiedShow Answer

Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.The price that buyers effectively pay after the tax is imposed is

Correct AnswerverifiedShow Answer

The higher a country's tax rates,the more likely that country will be

Correct AnswerverifiedShow Answer

The view held by Arthur Laffer and Ronald Reagan that cuts in tax rates would encourage people to increase the quantity of labor they supplied became known as

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Relative to a situation in which gasoline is not taxed,the imposition of a tax on gasoline causes the quantity of gasoline demanded to

Correct AnswerverifiedShow Answer

Figure 8-1 -Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The consumer surplus after the tax is measured by the area

Correct AnswerverifiedShow Answer

Figure 8-6 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-6.The amount of the tax on each unit of the good is

Correct AnswerverifiedShow Answer

The less freedom people are given to choose the date of their retirement,the

Correct AnswerverifiedShow Answer

Suppose a tax of $5 per unit is imposed on a good,and the tax causes the equilibrium quantity of the good to decrease from 200 units to 100 units.The tax decreases consumer surplus by $450 and decreases producer surplus by $300.The deadweight loss from the tax is

Correct AnswerverifiedShow Answer

Taxes on labor encourage all of the following except

Correct AnswerverifiedShow Answer

When a tax is levied on a good,the buyers and sellers of the good share the burden,

Correct AnswerverifiedShow Answer

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