Question 1

Total surplus in a market does not change when the government imposes a tax on that market because the loss of consumer surplus and producer surplus is equal to the gain of government revenue.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)  I+Y.
B)  J+K+L+M.
C)  L+M+Y.
D)  I+J+K+L+M+Y.E) None of the above
F) A) and D)

Question 3

Taxes on labor encourage which of the following?

Accepted Answer

A)  labor demand to be more inelastic
B)  mothers to stay at home rather than work in the labor force
C)  workers to work overtime
D)  fathers to take on second jobsE) A) and B)
F) A) and C)

Question 4

Which of the following ideas is the most plausible?

Accepted Answer

A)  Tax revenue is more likely to increase when a low tax rate is increased than when a high tax rate is increased.
B)  Tax revenue is less likely to increase when a low tax rate is increased than when a high tax rate is increased.
C)  Tax revenue is likely to increase by the same amount when a low tax rate is increased and when a high tax rate is increased.
D)  Decreasing a tax rate can never increase tax revenue.E) A) and C)
F) B) and C)

Question 5

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

Accepted Answer

A)  P0.
B)  P2.
C)  P5.
D)  P8.E) C) and D)
F) A) and D)

Question 6

Which of the following quantities decrease in response to a tax on a good?

Accepted Answer

A)  the equilibrium quantity in the market for the good,the effective price of the good paid by buyers,and consumer surplus
B)  the equilibrium quantity in the market for the good,producer surplus,and the well-being of buyers of the good
C)  the effective price received by sellers of the good,the wedge between the effective price paid by buyers and the effective price received by sellers,and consumer surplus
D)  None of the above is necessarily correct unless we know whether the tax is levied on buyers or on sellers.E) All of the above
F) C) and D)

Question 7

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.Without the tax,the consumer surplus is

Accepted Answer

A)  (P0-P2) x Q2.
B)    1/21 / 21/2  x (P0-P2) x Q2.
C)  (P0-P5) x Q5.
D)    1/21 / 21/2  x (P0-P5) x Q5. E) None of the above
F) B) and C)

Question 8

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

Accepted Answer

A)  increases by 50 percent.
B)  doubles.
C)  triples.
D)  quadruples.E) None of the above
F) A) and D)

Question 9

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.With the tax,the producer surplus is

Accepted Answer

A)  (P5-0) x Q5.
B)    1/21 / 21/2  x (P5-0) x Q5.
C)  (P8-0) x Q2.
D)    1/21 / 21/2  x (P8-0) x Q2. E) B) and D)
F) C) and D)

Question 10

Figure 8-3
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-3.The amount of tax revenue received by the government is equal to the area

Accepted Answer

A)  P3ACP1.
B)  ABC.
C)  P2DAP3.
D)  P1CDP2.E) A) and B)
F) A) and C)

Question 11

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 12

When a tax is imposed,the loss of consumer surplus and producer surplus as a result of the tax exceeds the tax revenue collected by the government.

Accepted Answer

A) True 
 B)False

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 amount of deadweight loss associated with the tax is equal to

Accepted Answer

A)  P3ACP1.
B)  ABC.
C)  P2ADP3.
D)  P1DCP2.E) B) and C)
F) A) and B)

Question 14

The Laffer curve illustrates that

Accepted Answer

A)  deadweight loss rises by the square of the increase in a tax.
B)  deadweight loss rises exponentially as a tax increases.
C)  tax revenue first rises,then falls as a tax increases.
D)  Both a) and b) are correct.E) A) and C)
F) None of the above

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.Without the tax,the total surplus is

Accepted Answer

A)  [  1/21 / 21/2  x (P0-P5) x Q5] + [  1/21 / 21/2  x (P5-0) x Q5].
B)  [  1/21 / 21/2  x (P0-P2) x Q2] +[(P2-P8) x Q2] + [  1/21 / 21/2  x (P8-0) x Q2].
C)  (P2-P8) x Q2.
D)    1/21 / 21/2  x (P2-P8) x (Q5-Q2) . E) B) and D)
F) A) and B)

Question 16

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 deadweight loss of the tax is

Accepted Answer

A)  [  1/21 / 21/2  x (P0-P5) x Q5] + [  1/21 / 21/2  x (P5-0) x Q5].
B)  [  1/21 / 21/2  x (P0-P2) x Q2] +[(P2-P8) x Q2] + [  1/21 / 21/2  x (P8-0) x Q2].
C)  (P2-P8) x Q2.
D)    1/21 / 21/2  x (P2-P8) x (Q5-Q2) . E) B) and D)
F) A) and B)

Question 17

Use the following graph shown to fill in the table that follows. 
 
 $$\begin{array} { | l | l | l | l | } 
\hline & \text { WITHOUT TAX } & \text { WITH TAX } & \text { CHANGE } \
\hline \text { Consumer surplus } & & & \
\hline \text { Producer surplus } & & & \
\hline \text { Tax revenue } & & & \
\hline \text { Total surplus } & & & \
\hline
\end{array}$$

Accepted Answer

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

Question 18

Suppose a tax of 5 dollars per unit is imposed on a good.The supply curve is a typical upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.The tax decreases consumer surplus by 10,000 dollars and decreases producer surplus by 15,000 dollars.The deadweight loss of the tax is 2,500 pounds.The tax decreased the equilibrium quantity of the good from

Accepted Answer

A)  6,500 to 5,500.
B)  5,500 to 4,500.
C)  5,000 to 3,000.
D)  6,000 to 4,000.E) B) and D)
F) None of the above

Question 19

It does not matter whether a tax is levied on the buyers or the sellers of a good because

Accepted Answer

A)  sellers always bear the full burden of the tax.
B)  buyers always bear the full burden of the tax.
C)  buyers and sellers will share the burden of the tax.
D)  None of the above is correct; the incidence of the tax does depend on whether the buyers or the sellers are required to pay the tax.E) B) and D)
F) All of the above

Question 20

When a tax is imposed on a good,consumer surplus decreases and producer surplus remains unchanged.

Accepted Answer

A) True 
 B)False

Exam 8: Application: The Costs of Taxation

Total surplus in a market does not change when the government imposes a tax on that market because the loss of consumer surplus and producer surplus is equal to the gain of government revenue.

Correct Answer
verified

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

Correct Answer
verified

Taxes on labor encourage which of the following?

Correct Answer
verified

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

Correct Answer
verified

Which of the following ideas is the most plausible?

Correct Answer
verified

Which of the following quantities decrease in response to a tax on a good?

Correct Answer
verified

Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3.The amount of deadweight loss associated with the tax is equal to

Correct Answer
verified

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

Correct Answer
verified

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.With the tax,the producer surplus is

Correct Answer
verified

Correct Answer
verified

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.Without the tax,the total surplus is

Correct Answer
verified

The Laffer curve illustrates that

Correct Answer
verified

When a tax is imposed on a good,consumer surplus decreases and producer surplus remains unchanged.

Correct Answer
verified

When a tax is imposed,the loss of consumer surplus and producer surplus as a result of the tax exceeds the tax revenue collected by the government.

Correct Answer
verified

Correct Answer
verified

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 deadweight loss of the tax is

Correct Answer
verified

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

Correct Answer
verified

Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3.The amount of tax revenue received by the government is equal to the area

Correct Answer
verified

It does not matter whether a tax is levied on the buyers or the sellers of a good because

Correct Answer
verified

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.Without the tax,the consumer surplus is

Correct Answer
verified

Exam 8: Application: The Costs of Taxation

Total surplus in a market does not change when the government imposes a tax on that market because the loss of consumer surplus and producer surplus is equal to the gain of government revenue.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Taxes on labor encourage which of the following?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following ideas is the most plausible?

Correct AnswerverifiedShow Answer

Which of the following quantities decrease in response to a tax on a good?

Correct AnswerverifiedShow Answer

Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3.The amount of deadweight loss associated with the tax is equal to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.With the tax,the producer surplus is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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.Without the tax,the total surplus is

Correct AnswerverifiedShow Answer

The Laffer curve illustrates that

Correct AnswerverifiedShow Answer

When a tax is imposed on a good,consumer surplus decreases and producer surplus remains unchanged.

Correct AnswerverifiedShow Answer

When a tax is imposed,the loss of consumer surplus and producer surplus as a result of the tax exceeds the tax revenue collected by the government.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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 deadweight loss of the tax is

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 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3.The amount of tax revenue received by the government is equal to the area

Correct AnswerverifiedShow Answer

It does not matter whether a tax is levied on the buyers or the sellers of a good because

Correct AnswerverifiedShow Answer

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.Without the tax,the consumer surplus is

Correct AnswerverifiedShow Answer

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