Quiz 8: Application: The Costs of Taxation
Business
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Q 2Q 2
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.
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True False
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Q 7Q 7
Taxes affect market participants by increasing the price paid by the buyer and received by the seller.
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True False
Q 8Q 8
Taxes affect market participants by increasing the price paid by the buyer and decreasing the price received by the seller.
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True False
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Q 11Q 11
When a good is taxed,the tax revenue collected by the government equals the decrease in the welfare of buyers and sellers caused by the tax.
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True False
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True False
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True False
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True False
Q 15Q 15
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.
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True False
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True False
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Q 18Q 18
Taxes cause deadweight losses because they prevent buyers and sellers from realizing some of the gains from trade.
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True False
Q 19Q 19
As the price elasticities of supply and demand increase,the deadweight loss from a tax increases.
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True False
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True False
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Q 22Q 22
The elasticities of the supply and demand curves in the market for cigarettes affect how much a tax distorts that market.
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True False
Q 23Q 23
If a tax did not induce buyers or sellers to change their behavior,it would not cause a deadweight loss.
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True False
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Q 28Q 28
Taxes on labor tend to encourage second earners to stay at home rather than work in the labor force.
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True False
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True False
Q 30Q 30
The demand for bread is less elastic than the demand for donuts;hence,a tax on bread will create a larger deadweight loss than will the same tax on donuts,other things equal.
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True False
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Q 38Q 38
A tax on unimproved land falls entirely on landowners because the supply of land is perfectly inelastic.
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True False
Q 39Q 39
Because the supply of land is perfectly elastic,the deadweight loss of a tax on land is very large.
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True False
Q 40Q 40
Economist Arthur Laffer made the argument that tax rates in the United States were so high that reducing the rates would increase tax revenue.
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True False
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Q 42Q 42
The result of the large tax cuts in the first Reagan Administration demonstrated very convincingly that Arthur Laffer was correct when he asserted that cuts in tax rates would increase tax revenue.
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True False
Q 43Q 43
The idea that tax cuts would increase the quantity of labor supplied,thus increasing tax revenue,became know as supply-side economics.
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True False
Q 44Q 44
The Laffer curve illustrates how taxes in markets with greater elasticities of demand compare to taxes in markets with smaller elasticities of supply.
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True False
Q 45Q 45
The more elastic are supply and demand in a market,the greater are the distortions caused by a tax on that market,and the more likely it is that a tax cut in that market will raise tax revenue.
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True False
Q 46Q 46
When the government imposes taxes on buyers and sellers of a good,society loses some of the benefits of market efficiency.
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True False
Q 47Q 47
John has been in the habit of mowing Willa's lawn each week for $20.John's opportunity cost is $15,and Willa would be willing to pay $25 to have her lawn mowed.What is the maximum tax the government can impose on lawn mowing without discouraging John and Willa from continuing their mutually beneficial arrangement?
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Essay
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Essay
Q 49Q 49
Suppose that instead of a supply-demand diagram,you are given the following information:
Qs = 100 + 3P
Qd = 400 - 2P
From this information compute equilibrium price and quantity.Now suppose that a tax is placed on buyers so that
Qd = 400 - (2P + T).
If T = 15,solve for the new equilibrium price and quantity.(Note: P is the price received by sellers and P + T is the price paid by buyers. )Compare these answers for equilibrium price and quantity with your first answers.What does this show you?
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Essay
Q 50Q 50
Using demand and supply diagrams,show the difference in deadweight loss between (a)a market with inelastic demand and supply and (b)a market with elastic demand and supply.
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Essay
Q 51Q 51
Illustrate on three demand-and-supply graphs how the size of a tax (small,medium and large)can alter total revenue and deadweight loss.
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Essay
Q 52Q 52
In 1776,the American Revolution was sparked by anger over
A) the extravagant lifestyle of British royalty.
B) the crimes of British soldiers stationed in the American colonies.
C) British taxes imposed on the American colonies.
D) the failure of the British to protect American colonists from attack by hostile Native Americans.
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Multiple Choice
Q 53Q 53
Anger over British taxes played a significant role in bringing about the
A) election of John Adams as the second American president.
B) American Revolution.
C) War of 1812.
D) "no new taxes" clause in the U.S.Constitution.
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Multiple Choice
Q 54Q 54
Who once said that taxes are the price we pay for a civilized society?
A) Aristotle
B) George Washington
C) Oliver Wendell Holmes,Jr.
D) Ronald Reagan
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Multiple Choice
Q 55Q 55
Who once said that taxes are the price we pay for a civilized society?
A) Milton Friedman
B) Theodore Roosevelt
C) Arthur Laffer
D) Oliver Wendell Holmes,Jr.
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Multiple Choice
Q 56Q 56
To fully understand how taxes affect economic well-being,we must
A) assume that economic well-being is not affected if all tax revenue is spent on goods and services for the people who are being taxed.
B) compare the taxes raised in the United States with those raised in other countries,especially France.
C) compare the reduced welfare of buyers and sellers to the amount of revenue the government raises.
D) take into account the fact that almost all taxes reduce the welfare of buyers,increase the welfare of sellers,and raise revenue for the government.
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Multiple Choice
Q 57Q 57
To fully understand how taxes affect economic well-being,we must compare the
A) benefit to buyers with the loss to sellers.
B) price paid by buyers to the price received by sellers.
C) profits earned by firms to the losses incurred by consumers.
D) decrease in total surplus to the increase in revenue raised by the government.
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Multiple Choice
Q 58Q 58
To fully understand how taxes affect economic well-being,we must compare the
A) consumer surplus to the producer surplus.
B) price paid by buyers to the price received by sellers.
C) reduced welfare of buyers and sellers to the revenue raised by the government.
D) consumer surplus to the deadweight loss.
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Multiple Choice
Q 59Q 59
When a tax is levied on a good,the buyers and sellers of the good share the burden,
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.
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Multiple Choice
Q 60Q 60
A tax on a good
A) raises the price that buyers effectively pay and raises the price that sellers effectively receive.
B) raises the price that buyers effectively pay and lowers the price that sellers effectively receive.
C) lowers the price that buyers effectively pay and raises the price that sellers effectively receive.
D) lowers the price that buyers effectively pay and lowers the price that sellers effectively receive.
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Multiple Choice
Q 61Q 61
When a tax is placed on a product,the price paid by buyers
A) rises,and the price received by sellers rises.
B) rises,and the price received by sellers falls.
C) falls,and the price received by sellers rises.
D) falls,and the price received by sellers falls.
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Multiple Choice
Q 62Q 62
A tax affects
A) buyers only.
B) sellers only.
C) buyers and sellers only.
D) buyers,sellers,and the government.
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Multiple Choice
Q 63Q 63
The government's benefit from a tax can be measured by
A) consumer surplus.
B) producer surplus.
C) tax revenue.
D) All of the above are correct.
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Multiple Choice
Q 64Q 64
What happens to the total surplus in a market when the government imposes a tax?
A) Total surplus increases by the amount of the tax.
B) Total surplus increases but by less than the amount of the tax.
C) Total surplus decreases.
D) Total surplus is unaffected by the tax.
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Multiple Choice
Q 65Q 65
When a good is taxed,
A) both buyers and sellers of the good are made worse off.
B) only buyers are made worse off,because they ultimately bear the burden of the tax.
C) only sellers are made worse off,because they ultimately bear the burden of the tax.
D) neither buyers nor sellers are made worse off,since tax revenue is used to provide goods and services that would otherwise not be provided in a market economy.
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Multiple Choice
Q 66Q 66
To measure the gains and losses from a tax on a good,economists use the tools of
A) macroeconomics.
B) welfare economics.
C) international-trade theory.
D) circular-flow analysis.
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Multiple Choice
Q 67Q 67
When a tax is imposed on a good,the
A) supply curve for the good always shifts.
B) demand curve for the good always shifts.
C) amount of the good that buyers are willing to buy at each price always remains unchanged.
D) equilibrium quantity of the good always decreases.
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Multiple Choice
Q 68Q 68
A tax levied on the sellers of a good shifts the
A) supply curve upward (or to the left).
B) supply curve downward (or to the right).
C) demand curve upward (or to the right).
D) demand curve downward (or to the left).
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Multiple Choice
Q 69Q 69
A tax levied on the buyers of a good shifts the
A) supply curve upward (or to the left).
B) supply curve downward (or to the right).
C) demand curve downward (or to the left).
D) demand curve upward (or to the right).
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Multiple Choice
Q 70Q 70
If a tax shifts the supply curve upward (or to the left),we can infer that the tax was levied on
A) buyers of the good.
B) sellers of the good.
C) both buyers and sellers of the good.
D) We cannot infer anything because the shift described is not consistent with a tax.
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Multiple Choice
Q 71Q 71
If a tax shifts the supply curve downward (or to the right),we can infer that the tax was levied on
A) buyers of the good.
B) sellers of the good.
C) both buyers and sellers of the good.
D) We cannot infer anything because the shift described is not consistent with a tax.
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Multiple Choice
Q 72Q 72
If a tax shifts the demand curve downward (or to the left),we can infer that the tax was levied on
A) buyers of the good.
B) sellers of the good.
C) both buyers and sellers of the good.
D) We cannot infer anything because the shift described is not consistent with a tax.
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Multiple Choice
Q 73Q 73
If a tax shifts the demand curve upward (or to the right),we can infer that the tax was levied on
A) buyers of the good.
B) sellers of the good.
C) both buyers and sellers of the good.
D) We cannot infer anything because the shift described is not consistent with a tax.
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Multiple Choice
Q 74Q 74
When a tax is imposed on the buyers of a good,the demand curve shifts
A) downward by the amount of the tax.
B) upward by the amount of the tax.
C) downward by less than the amount of the tax.
D) upward by more than the amount of the tax.
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Multiple Choice
Q 75Q 75
When a tax is imposed on the sellers of a good,the
A) demand curve shifts downward by less than the amount of the tax.
B) demand curve shifts downward by the amount of the tax.
C) supply curve shifts upward by less than the amount of the tax.
D) supply curve shifts upward by the amount of the tax.
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Multiple Choice
Q 76Q 76
A tax placed on buyers of tires shifts the
A) demand curve for tires downward,decreasing the price received by sellers of tires and causing the quantity of tires to increase.
B) demand curve for tires downward,decreasing the price received by sellers of tires and causing the quantity of tires to decrease.
C) supply curve for tires upward,decreasing the effective price paid by buyers of tires and causing the quantity of tires to increase.
D) supply curve for tires upward,increasing the effective price paid by buyers of tires and causing the quantity of tires to decrease.
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Multiple Choice
Q 77Q 77
Suppose a tax is imposed on the buyers of fast-food French fries.The burden of the tax will
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.
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Multiple Choice
Q 78Q 78
It does not matter whether a tax is levied on the buyers or the sellers of a good because
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.
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Multiple Choice
Q 79Q 79
When alcohol is taxed and sellers of alcohol are required to pay the tax to the government,
A) the quantity of alcohol bought and sold in the market is reduced.
B) the price paid by buyers of alcohol decreases.
C) the demand for alcohol decreases.
D) there is a movement downward and to the right along the demand curve for alcohol.
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Multiple Choice
Q 80Q 80
One result of a tax,regardless of whether the tax is placed on the buyers or the sellers,is that the
A) size of the market is unchanged.
B) price the seller effectively receives is higher.
C) supply curve for the good shifts upward by the amount of the tax.
D) tax reduces the welfare of both buyers and sellers.
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Multiple Choice
Q 81Q 81
When a tax is placed on the buyers of a product,a result is that buyers effectively pay
A) less than before the tax,and sellers effectively receive less than before the tax.
B) less than before the tax,and sellers effectively receive more than before the tax.
C) more than before the tax,and sellers effectively receive less than before the tax.
D) more than before the tax,and sellers effectively receive more than before the tax.
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Multiple Choice
Q 82Q 82
When a tax is levied on a good,
A) neither buyers nor sellers are made worse off.
B) only sellers are made worse off.
C) only buyers are made worse off.
D) both buyers and sellers are made worse off.
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Multiple Choice
Q 83Q 83
When a tax is levied on the buyers of a good,the
A) supply curve shifts upward by the amount of the tax.
B) quantity supplied increases for all conceivable prices of the good.
C) buyers of the good will send tax payments to the government.
D) demand curve shifts to the right by the horizontal distance of the tax.
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Multiple Choice
Q 84Q 84
When a tax is levied on the sellers of a good,the
A) supply curve shifts upward by the amount of the tax.
B) quantity demanded decreases for all conceivable prices of the good.
C) quantity supplied increases for all conceivable prices of the good.
D) None of the above is correct.
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Multiple Choice
Q 85Q 85
A $2.00 tax per gallon of paint placed on the sellers of paint will shift the supply curve
A) downward by exactly $2.00.
B) downward by less than $2.00.
C) upward by exactly $2.00.
D) upward by less than $2.00.
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Multiple Choice
Q 86Q 86
When a tax on a good is enacted,
A) buyers and sellers share the burden of the tax regardless of whether the tax is levied on buyers or on sellers.
B) buyers always bear the full burden of the tax.
C) sellers always bear the full burden of the tax.
D) sellers bear the full burden of the tax if the tax is levied on them;buyers bear the full burden of the tax if the tax is levied on them.
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Multiple Choice
Q 87Q 87
A tax placed on a good
A) causes the effective price to sellers to increase.
B) affects the welfare of buyers of the good but not the welfare of sellers.
C) causes the equilibrium quantity of the good to decrease.
D) creates a burden that is usually borne entirely by the sellers of the good.
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Multiple Choice
Q 88Q 88
When a tax is levied on buyers of a good,
A) government collects too little revenue to justify the tax if the equilibrium quantity of the good decreases as a result of the tax.
B) there is an increase in the quantity of the good supplied.
C) a wedge is placed between the price buyers pay and the price sellers effectively receive.
D) the effective price to buyers decreases because the demand curve shifts leftward.
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Multiple Choice
Q 89Q 89
When a tax is levied on a good,
A) government collects revenues which might justify the loss in total welfare.
B) there is a decrease in the quantity of the good bought and sold in the market.
C) a wedge is placed between the price buyers pay and the price sellers effectively receive.
D) All of the above are correct.
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Multiple Choice
Q 90Q 90
When a tax is levied on a good,
A) government revenues exceed the loss in total welfare.
B) there is a decrease in the quantity of the good bought and sold in the market.
C) the price that sellers receive exceeds the price that buyers pay.
D) All of the above are correct.
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Multiple Choice
Q 91Q 91
The benefit to buyers of participating in a market is measured by
A) the price elasticity of demand.
B) consumer surplus.
C) the maximum amount that buyers are willing to pay for the good.
D) the equilibrium price.
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Multiple Choice
Q 92Q 92
The benefit to buyers of participating in a market is measured by
A) consumer surplus.
B) producer surplus.
C) total surplus.
D) deadweight loss.
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Multiple Choice
Q 93Q 93
The benefit that government receives from a tax is measured by
A) the change in the equilibrium quantity of the good.
B) the change in the equilibrium price of the good.
C) tax revenue.
D) total surplus.
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Multiple Choice
Q 94Q 94
The benefit that government receives from a tax is measured by
A) deadweight loss.
B) consumer surplus.
C) tax incidence.
D) tax revenue.
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Multiple Choice
Q 95Q 95
If T represents the size of the tax on a good and Q represents the quantity of the good that is sold,total tax revenue received by government can be expressed as
A) T/Q.
B) T+Q.
C) TxQ.
D) (TxQ)/Q.
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Multiple Choice
Q 96Q 96
When a tax is levied on buyers,the
A) supply curves shifts upward by the amount of the tax.
B) tax creates a wedge between the price buyers effectively pay and the price sellers receive.
C) tax has no effect on the well-being of sellers.
D) All of the above are correct.
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Multiple Choice
Q 97Q 97
For the purpose of analyzing the gains and losses from a tax on a good,we use tax revenue as a direct measure of the
A) government's benefit from the tax.
B) government's loss from the tax.
C) deadweight loss of the tax.
D) overall net gain to society of the tax.
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Multiple Choice
Q 98Q 98
The decrease in total surplus that results from a market distortion,such as a tax,is called a
A) wedge loss.
B) revenue loss.
C) deadweight loss.
D) consumer surplus loss.
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Multiple Choice
Q 99Q 99
A tax on a good
A) gives buyers an incentive to buy more of the good than they otherwise would buy.
B) gives sellers an incentive to produce less of the good than they otherwise would produce.
C) creates a benefit to the government,the size of which exceeds the loss in surplus to buyers and sellers.
D) All of the above are correct.
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Multiple Choice
Q 100Q 100
When the price of a good is measured in dollars,then the size of the deadweight loss that results from taxing that good is measured in
A) units of the good that is being taxed.
B) units of a related good that is not being taxed.
C) dollars.
D) percentage change.
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Multiple Choice
Q 101Q 101
The benefit to sellers of participating in a market is measured by the
A) amount of taxes collected on sales of the good.
B) producer surplus.
C) amount sellers receive for their product.
D) sellers' willingness to sell.
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Multiple Choice
Q 102Q 102
When the government places a tax on a product,the cost of the tax to buyers and sellers
A) is less than the revenue raised from the tax by the government.
B) is equal to the revenue raised from the tax by the government.
C) exceeds the revenue raised from the tax by the government.
D) Without additional information,such as the elasticity of demand for this product,it is impossible to compare the cost of a tax to buyers and sellers with tax revenue.
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Multiple Choice
Q 103Q 103
Relative to a situation in which gasoline is not taxed,the imposition of a tax on gasoline causes the quantity of gasoline demanded to
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.
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Multiple Choice
Q 104Q 104
Which of the following quantities decrease in response to a tax on a good?
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.
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Multiple Choice
Q 105Q 105
For a good that is taxed,the area on the relevant supply-and-demand graph that represents government's tax revenue is a
A) triangle.
B) rectangle.
C) trapezoid.
D) None of the above is correct;government's tax revenue is the area between the supply and demand curves,above the horizontal axis,and below the effective price to buyers.
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Multiple Choice
Q 106Q 106
For a good that is taxed,the area on the relevant supply-and-demand graph that represents government's tax revenue is
A) smaller than the area that represents the loss of consumer surplus and producer surplus caused by the tax.
B) bounded by the supply curve,the demand curve,the effective price paid by buyers,and the effective price received by sellers.
C) a right triangle.
D) a triangle,but not necessarily a right triangle.
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Multiple Choice
Q 107Q 107
Total surplus with a tax is equal to
A) consumer surplus plus producer surplus.
B) consumer surplus minus producer surplus.
C) consumer surplus plus producer surplus minus tax revenue.
D) consumer surplus plus producer surplus plus tax revenue.
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Multiple Choice
Q 108Q 108
Taxes cause deadweight losses because they
A) lead to losses in surplus for consumers and for producers that,when taken together,exceed tax revenue collected by the government.
B) distort incentives to both buyers and sellers.
C) prevent buyers and sellers from realizing some of the gains from trade.
D) All of the above are correct.
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Multiple Choice
Q 109Q 109
Taxes cause deadweight losses because taxes
A) reduce the sum of producer and consumer surpluses by more than the amount of tax revenue.
B) prevent buyers and sellers from realizing some of the gains from trade.
C) cause marginal buyers and marginal sellers to leave the market,causing the quantity sold to fall.
D) All of the above are correct.
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Multiple Choice
Q 110Q 110
Deadweight loss measures the loss
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.
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Multiple Choice
Q 111Q 111
The loss in total surplus resulting from a tax is called
A) a deficit.
B) economic loss.
C) deadweight loss.
D) inefficiency.
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Multiple Choice
Q 112Q 112
Deadweight loss is the
A) decline in total surplus that results from a tax.
B) decline in government revenue when taxes are reduced in a market.
C) decline in consumer surplus when a tax is placed on buyers.
D) loss of profits to business firms when a tax is imposed.
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Multiple Choice
Q 113Q 113
A deadweight loss is a consequence of a tax on a good because the tax
A) induces the government to increase its expenditures.
B) induces buyers to consume less,and sellers to produce less.
C) increases the equilibrium price in the market.
D) imposes a loss on buyers that is greater than the loss to sellers.
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Multiple Choice
Q 114Q 114
For good A,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.When good A is taxed,the area on the relevant supply-and-demand graph that represents the deadweight loss is
A) larger than the area that represents consumer surplus in the absence of the tax.
B) larger than the area that represents government's tax revenue.
C) a triangle.
D) All of the above are correct.
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Multiple Choice
Q 115Q 115
For good B,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.When good B is taxed,the area on the relevant supply-and-demand graph that represents
A) government's tax revenue is a rectangle.
B) the deadweight loss of the tax is a triangle.
C) the loss of consumer surplus caused by the tax is neither a rectangle nor a triangle.
D) All of the above are correct.
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Multiple Choice
Q 116Q 116
For good X,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.A tax of $10 per unit is imposed on good X.The tax reduces the equilibrium quantity in the market by 200 units.The deadweight loss from the tax is
A) $2,000.
B) $1,000.
C) $500.
D) $250.
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Multiple Choice
Q 117Q 117
In the market for widgets,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.The equilibrium quantity in the market for widgets is 200 per month when there is no tax.Then a tax of $5 per widget is imposed.As a result,the government is able to raise $750 per month in tax revenue.We can conclude that the equilibrium quantity of widgets has fallen by
A) 25 per month.
B) 50 per month.
C) 75 per month.
D) 100 per month.
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Multiple Choice
Q 118Q 118
In the market for widgets,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.The equilibrium quantity in the market for widgets is 200 per month when there is no tax.Then a tax of $5 per widget is imposed.As a result,the government is able to raise $750 per month in tax revenue.We can conclude that the post tax quantity of widgets is
A) 50 per month.
B) 75 per month.
C) 100 per month.
D) 150 per month.
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Multiple Choice
Q 119Q 119
In the market for widgets,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.The equilibrium quantity in the market for widgets is 200 per month when there is no tax.Then a tax of $5 per widget is imposed.The price paid by buyers increases by $2 and the after-tax price received by sellers falls by $3.The government is able to raise $750 per month in revenue from the tax.The deadweight loss from the tax is
A) $250.
B) $125.
C) $75.
D) $50.
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Multiple Choice
Q 120Q 120
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
A) I+Y.
B) J+K+L+M.
C) L+M+Y.
D) I+J+K+L+M+Y.
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Multiple Choice
Q 121Q 121
Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by I+J+K+L+M+Y represents
A) total surplus before the tax.
B) total surplus after the tax.
C) consumer surplus before the tax.
D) deadweight loss from the tax.
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Multiple Choice
Q 122Q 122
Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.Total surplus after the tax is measured by the area
A) I+Y.
B) J+K+L+M.
C) I+Y+B.
D) I+J+K+L+M+Y.
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Multiple Choice
Q 123Q 123
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
A) total surplus after the tax.
B) total surplus before the tax.
C) deadweight loss from the tax.
D) tax revenue.
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Multiple Choice
Q 124Q 124
Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by K+L represents
A) tax revenue.
B) consumer surplus before the tax.
C) producer surplus after the tax.
D) total surplus before the tax.
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Multiple Choice
Q 125Q 125
Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The tax revenue is measured by the area
A) K+L.
B) I+Y.
C) J+K+L+M.
D) I+J+K+L+M+Y.
Free
Multiple Choice
Q 126Q 126
Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by L+M+Y represents
A) consumer surplus after the tax.
B) consumer surplus before the tax.
C) producer surplus after the tax.
D) producer surplus before the tax.
Free
Multiple Choice
Q 127Q 127
Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The producer surplus before the tax is measured by the area
A) I+J+K.
B) I+Y.
C) L+M+Y.
D) M.
Free
Multiple Choice
Q 128Q 128
Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by M represents
A) consumer surplus after the tax.
B) consumer surplus before the tax.
C) producer surplus after the tax.
D) producer surplus before the tax.
Free
Multiple Choice
Q 129Q 129
Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The producer surplus after the tax is measured by the area
A) M.
B) L+M+N+Y+B.
C) L+M+Y.
D) J.
Free
Multiple Choice
Q 130Q 130
Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by J+K+I represents
A) consumer surplus after the tax.
B) consumer surplus before the tax.
C) producer surplus after the tax.
D) producer surplus before the tax.
Free
Multiple Choice
Q 131Q 131
Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The consumer surplus before the tax is measured by the area
A) M.
B) L+M+Y.
C) J.
D) J+K+I.
Free
Multiple Choice
Q 132Q 132
Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by J represents
A) consumer surplus after the tax.
B) consumer surplus before the tax.
C) producer surplus after the tax.
D) producer surplus before the tax.
Free
Multiple Choice
Q 133Q 133
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
A) J+K+I.
B) J.
C) M.
D) L+M+Y.
Free
Multiple Choice
Q 134Q 134
Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by I+Y represents the
A) deadweight loss due to the tax.
B) loss in consumer surplus due to the tax.
C) loss in producer surplus due to the tax.
D) total surplus before the tax.
Free
Multiple Choice
Q 135Q 135
Figure 8-1
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The deadweight loss due to the tax is measured by the area
A) J+K+L+M.
B) J+K+L+M+N.
C) I+Y.
D) I+Y+B.
Free
Multiple Choice
Q 136Q 136
Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.The imposition of the tax causes the quantity sold to
A) increase by 1 unit.
B) decrease by 1 unit.
C) increase by 2 units.
D) decrease by 2 units.
Free
Multiple Choice
Q 137Q 137
Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.The imposition of the tax causes the price paid by buyers to
A) decrease by $2.
B) increase by $3.
C) decrease by $4.
D) increase by $5.
Free
Multiple Choice
Q 138Q 138
Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.The imposition of the tax causes the price received by sellers to
A) decrease by $2.
B) increase by $3.
C) decrease by $4.
D) increase by $5.
Free
Multiple Choice
Q 139Q 139
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 the tax on each unit of the good is
A) $1.
B) $4.
C) $5.
D) $9.
Free
Multiple Choice
Q 140Q 140
Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.The per-unit burden of the tax on buyers is
A) $2.
B) $3.
C) $4.
D) $5.
Free
Multiple Choice
Q 141Q 141
Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.The per-unit burden of the tax on sellers is
A) $2.
B) $3.
C) $4.
D) $5.
Free
Multiple Choice
Q 142Q 142
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 tax revenue received by the government is
A) $2.50.
B) $4.
C) $5.
D) $9.
Free
Multiple Choice
Q 143Q 143
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
A) $2.50.
B) $5.
C) $7.50.
D) $10.
Free
Multiple Choice
Q 144Q 144
Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.The loss of consumer surplus as a result of the tax is
A) $1.50.
B) $3.
C) $4.50.
D) $6.
Free
Multiple Choice
Q 145Q 145
Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.The loss of producer surplus as a result of the tax is
A) $1.
B) $2.
C) $3.
D) $4.
Free
Multiple Choice
Q 146Q 146
Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.Consumer surplus without the tax is
A) $6,and consumer surplus with the tax is $1.50.
B) $6,and consumer surplus with the tax is $4.50.
C) $10,and consumer surplus with the tax is $1.50.
D) $10,and consumer surplus with the tax is $4.50.
Free
Multiple Choice
Q 147Q 147
Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.Producer surplus without the tax is
A) $4,and producer surplus with the tax is $1.
B) $4,and producer surplus with the tax is $3.
C) $10,and producer surplus with the tax is $1.
D) $10,and producer surplus with the tax is $3.
Free
Multiple Choice
Q 148Q 148
Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.Total surplus without the tax is
A) $10,and total surplus with the tax is $2.50.
B) $10,and total surplus with the tax is $7.50.
C) $20,and total surplus with the tax is $2.50.
D) $20,and total surplus with the tax is $7.50.
Free
Multiple Choice
Q 149Q 149
Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.The loss of consumer surplus associated with some buyers dropping out of the market as a result of the tax is
A) $0.
B) $1.50.
C) $3.
D) $4.50.
Free
Multiple Choice
Q 150Q 150
Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.The loss of consumer surplus for those buyers of the good who continue to buy it after the tax is imposed is
A) $0.
B) $1.50.
C) $3.
D) $4.50.
Free
Multiple Choice
Q 151Q 151
Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.The loss of producer surplus associated with some sellers dropping out of the market as a result of the tax is
A) $0.
B) $1.
C) $2.
D) $3.
Free
Multiple Choice
Q 152Q 152
Figure 8-2
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-2.The loss of producer surplus for those sellers of the good who continue to sell it after the tax is imposed is
A) $0.
B) $1.
C) $2.
D) $3.
Free
Multiple Choice
Q 153Q 153
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
A) P1.
B) P2.
C) P3.
D) P4.
Free
Multiple Choice
Q 154Q 154
Figure 8-3
The vertical distance between points A and C represents a tax in the market.
-Refer to Figure 8-3.The price that buyers effectively pay after the tax is imposed is
A) P1.
B) P2.
C) P3.
D) P4.
Free
Multiple Choice
Q 155Q 155
Figure 8-3
The vertical distance between points A and C represents a tax in the market.
-Refer to Figure 8-3.The price that sellers effectively receive after the tax is imposed is
A) P1.
B) P2.
C) P3.
D) P4.
Free
Multiple Choice
Q 156Q 156
Figure 8-3
The vertical distance between points A and C represents a tax in the market.
-Refer to Figure 8-3.The per unit burden of the tax on buyers is
A) P3 - P1.
B) P3 - P2.
C) P2 - P1.
D) P4 - P3.
Free
Multiple Choice
Q 157Q 157
Figure 8-3
The vertical distance between points A and C represents a tax in the market.
-Refer to Figure 8-3.The per-unit burden of the tax on sellers is
A) P3 - P1.
B) P3 - P2.
C) P2 - P1.
D) P4 - P3.
Free
Multiple Choice
Q 158Q 158
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 the tax on each unit of the good is
A) P3 - P1.
B) P3 - P2.
C) P2 - P1.
D) P4 - P3.
Free
Multiple Choice
Q 159Q 159
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
A) P3ACP1.
B) ABC.
C) P2DAP3.
D) P1CDP2.
Free
Multiple Choice
Q 160Q 160
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
A) P3ACP1.
B) ABC.
C) P2ADP3.
D) P1DCP2.
Free
Multiple Choice
Q 161Q 161
Figure 8-3
The vertical distance between points A and C represents a tax in the market.
-Refer to Figure 8-3.The loss in consumer surplus caused by the tax is measured by the area
A) P1P3AC.
B) P3ABP2.
C) P1P3ABC.
D) ABC.
Free
Multiple Choice
Q 162Q 162
Figure 8-3
The vertical distance between points A and C represents a tax in the market.
-Refer to Figure 8-3.The loss in producer surplus caused by the tax is measured by the area
A) ABC.
B) P1P3ABC.
C) P1P2BC.
D) P1C0.
Free
Multiple Choice
Q 163Q 163
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?
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)
Free
Multiple Choice
Q 164Q 164
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 deadweight loss of the tax?
A) Deadweight loss = (1/2)(P2 - P1)(Q2 + Q1)
B) Deadweight loss = (1/2)(P3 - P1)(Q2 + Q1)
C) Deadweight loss = (1/2)(P3 - P2)(Q2 - Q1)
D) Deadweight loss = (1/2)(P3 - P1)(Q2 - Q1)
Free
Multiple Choice
Q 165Q 165
Figure 8-4
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-4.The equilibrium price before the tax is imposed is
A) $24,and the equilibrium quantity is 70.
B) $16,and the equilibrium quantity is 100.
C) $10,and the equilibrium quantity is 70.
D) $8,and the equilibrium quantity is 100.
Free
Multiple Choice
Q 166Q 166
Figure 8-4
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-4.The price that buyers effectively pay after the tax is imposed is
A) $24.
B) $16.
C) $14.
D) $10.
Free
Multiple Choice
Q 167Q 167
Figure 8-4
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-4.The price that sellers effectively receive after the tax is imposed is
A) $24.
B) $16.
C) $14.
D) $10.
Free
Multiple Choice
Q 168Q 168
Figure 8-4
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-4.The per-unit burden of the tax on buyers is
A) $14.
B) $10.
C) $8.
D) $6.
Free
Multiple Choice
Q 169Q 169
Figure 8-4
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-4.The per-unit burden of the tax on sellers is
A) $14.
B) $10.
C) $8.
D) $6.
Free
Multiple Choice
Q 170Q 170
Figure 8-4
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-4.The amount of the tax on each unit of the good is
A) $14.
B) $10.
C) $8.
D) $6.
Free
Multiple Choice
Q 171Q 171
Figure 8-4
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-4.The amount of tax revenue received by the government is equal to
A) $210.
B) $420.
C) $980.
D) $1,600.
Free
Multiple Choice
Q 172Q 172
Figure 8-4
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-4.The amount of deadweight loss as a result of the tax is
A) $210.
B) $420.
C) $980.
D) $1,600.
Free
Multiple Choice
Q 173Q 173
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 consumer surplus that amounts to
A) $120.
B) $240.
C) $560.
D) $680.
Free
Multiple Choice
Q 174Q 174
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
A) $90.
B) $180.
C) $420.
D) $510.
Free
Multiple Choice
Q 175Q 175
Figure 8-5
Suppose that the government imposes a tax of P3 - P1.
-Refer to Figure 8-5.The equilibrium price before the tax is imposed is
A) P1.
B) P2.
C) P3.
D) P4.
Free
Multiple Choice
Q 176Q 176
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
A) P1.
B) P2.
C) P3.
D) P4.
Free
Multiple Choice
Q 177Q 177
Figure 8-5
Suppose that the government imposes a tax of P3 - P1.
-Refer to Figure 8-5.The price that sellers effectively receive after the tax is imposed is
A) P1.
B) P2.
C) P3.
D) P4.
Free
Multiple Choice
Q 178Q 178
Figure 8-5
Suppose that the government imposes a tax of P3 - P1.
-Refer to Figure 8-5.The tax is levied on
A) buyers only.
B) sellers only.
C) both buyers and sellers.
D) This is impossible to determine from the figure.
Free
Multiple Choice
Q 179Q 179
Figure 8-5
Suppose that the government imposes a tax of P3 - P1.
-Refer to Figure 8-5.Consumer surplus before the tax was levied is represented by area
A) A.
B) A+B+C.
C) D+H+F.
D) F.
Free
Multiple Choice
Q 180Q 180
Figure 8-5
Suppose that the government imposes a tax of P3 - P1.
-Refer to Figure 8-5.Producer surplus before the tax was levied is represented by area
A) A.
B) A+B+C.
C) D+H+F.
D) F.
Free
Multiple Choice
Q 181Q 181
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
A) A.
B) A+B+C.
C) D+H+F.
D) F.
Free
Multiple Choice
Q 182Q 182
Figure 8-5
Suppose that the government imposes a tax of P3 - P1.
-Refer to Figure 8-5.After the tax is levied,producer surplus is represented by area
A) A.
B) A+B+C.
C) D+H+F.
D) F.
Free
Multiple Choice
Q 183Q 183
Figure 8-5
Suppose that the government imposes a tax of P3 - P1.
-Refer to Figure 8-5.The tax causes a reduction in consumer surplus that is represented by area
A) A.
B) B+C.
C) C+H.
D) F.
Free
Multiple Choice
Q 184Q 184
Figure 8-5
Suppose that the government imposes a tax of P3 - P1.
-Refer to Figure 8-5.The tax causes a reduction in producer surplus that is represented by area
A) A.
B) C+H.
C) D+H.
D) F.
Free
Multiple Choice
Q 185Q 185
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
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.
Free
Multiple Choice
Q 186Q 186
Figure 8-5
Suppose that the government imposes a tax of P3 - P1.
-Refer to Figure 8-5.The total surplus with the tax is represented by area
A) C+H.
B) A+B+C.
C) D+H+F.
D) A+B+D+F.
Free
Multiple Choice
Q 187Q 187
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
A) A+B+D+F.
B) A+B+C.
C) D+H+F.
D) C+H.
Free
Multiple Choice
Q 188Q 188
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,the equilibrium price and quantity are
A) $16 and 300.
B) $10 and 600.
C) $10 and 300.
D) $6 and 300.
Free
Multiple Choice
Q 189Q 189
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
A) $1,500.
B) $2,400.
C) $3,000.
D) $3,600.
Free
Multiple Choice
Q 190Q 190
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,producer surplus in this market is
A) $1,500.
B) $2,400.
C) $3,000.
D) $3,600.
Free
Multiple Choice
Q 191Q 191
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,total surplus in this market is
A) $3,000.
B) $4,800.
C) $6,000.
D) $7,200.
Free
Multiple Choice
Q 192Q 192
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,the price buyers effectively pay is
A) $4.
B) $6.
C) $10.
D) $16.
Free
Multiple Choice
Q 193Q 193
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,buyers effectively pay what amount of the $10 tax?
A) $0
B) $4
C) $6
D) $10
Free
Multiple Choice
Q 194Q 194
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?
A) $0
B) $4
C) $6
D) $10
Free
Multiple Choice
Q 195Q 195
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,the price sellers effectively receive is
A) $4.
B) $6.
C) $10.
D) $16.
Free
Multiple Choice
Q 196Q 196
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,consumer surplus is
A) $600.
B) $900.
C) $1,500.
D) $3,000.
Free
Multiple Choice
Q 197Q 197
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,producer surplus is
A) $450.
B) $600.
C) $900.
D) $1,500.
Free
Multiple Choice
Q 198Q 198
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 placed on this good,the quantity sold
A) is 600,and buyers effectively pay $10.
B) is 300,and buyers effectively pay $10.
C) is 600,and buyers effectively pay $16.
D) is 300,and buyers effectively pay $16.
Free
Multiple Choice
Q 199Q 199
Figure 8-6
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-6.When the government imposes the tax in this market,tax revenue is
A) $600.
B) $900.
C) $1,500.
D) $3,000.
Free
Multiple Choice
Q 200Q 200
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
A) $6.
B) $8.
C) $10.
D) $12.
Free
Multiple Choice
Q 201Q 201
Figure 8-6
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-6.Total surplus with the tax in place is
A) $1,500.
B) $3,600.
C) $4,500.
D) $6,000.
Free
Multiple Choice
Q 202Q 202
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 consumer surplus when the tax is imposed in this market?
A) Consumer surplus falls by $3,600.
B) Consumer surplus falls by $2,700.
C) Consumer surplus falls by $1,800.
D) Consumer surplus falls by $900.
Free
Multiple Choice
Q 203Q 203
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 producer surplus when the tax is imposed in this market?
A) Producer surplus falls by $600.
B) Producer surplus falls by $900.
C) Producer surplus falls by $1,800.
D) Producer surplus falls by $2,100.
Free
Multiple Choice
Q 204Q 204
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?
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.
Free
Multiple Choice
Q 205Q 205
Figure 8-6
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-6.The tax results in a deadweight loss that amounts to
A) $600.
B) $900.
C) $1,500.
D) $1,800.
Free
Multiple Choice
Q 206Q 206
Figure 8-7
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-7.Before the tax is imposed,the equilibrium price is
A) $16,and the equilibrium quantity is 15.
B) $12,and the equilibrium quantity is 15.
C) $12,and the equilibrium quantity is 25.
D) $8,and the equilibrium quantity is 15.
Free
Multiple Choice
Q 207Q 207
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,buyers effectively pay
A) $16 for each unit of the good,and sellers effectively receive $12 for each unit of the good.
B) $16 for each unit of the good,and sellers effectively receive $8 for each unit of the good.
C) $12 for each unit of the good,and sellers effectively receive $8 for each unit of the good.
D) $14 for each unit of the good,and sellers effectively receive $10 for each unit of the good.
Free
Multiple Choice
Q 208Q 208
Figure 8-7
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-7.Suppose a 20th unit of the good were sold by a seller to a buyer.Which of the following statements is correct?
A) For the 20th unit,the difference between the buyer's value and the seller's cost is less than the tax per unit.
B) For the 20th unit,the difference between the buyer's value and the seller's cost is greater than the tax per unit.
C) For the 20th unit,the difference between the buyer's value and the seller's cost is equal to the tax per unit.
D) It makes sense for the buyer to buy and for the seller to sell the 20th unit,with or without the tax in place.
Free
Multiple Choice
Q 209Q 209
Figure 8-7
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-7.Which of the following statements summarizes the incidence of the tax?
A) For each unit of the good that is sold,buyers bear one-half of the tax burden,and sellers bear one-half of the tax burden.
B) For each unit of the good that is sold,buyers bear one-third of the tax burden,and sellers bear two-thirds of the tax burden.
C) For each unit of the good that is sold,buyers bear one-fourth of the tax burden,and sellers bear three-fourths of the tax burden.
D) For each unit of the good that is sold,buyers bear three-fourths of the tax burden,and sellers bear one-fourth of the tax burden.
Free
Multiple Choice
Q 210Q 210
Figure 8-7
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-7.Which of the following statements is correct?
A) Total surplus before the tax is imposed is $250.
B) After the tax is imposed,consumer surplus is 45 percent of its pre-tax value.
C) After the tax is imposed,producer surplus is 45 percent of its pre-tax value.
D) All of the above are correct.
Free
Multiple Choice
Q 211Q 211
Figure 8-7
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-7.Which of the following statements is correct?
A) Total surplus before the tax is imposed is $45.
B) After the tax is imposed,consumer surplus is 25 percent of its pre-tax value.
C) After the tax is imposed,producer surplus is 36 percent of its pre-tax value.
D) All of the above are correct.
Free
Multiple Choice
Q 212Q 212
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,
A) consumer surplus decreases from $150 to $60.
B) producer surplus decreases from $125 to $45.
C) the market experiences a deadweight loss of $45.
D) All of the above are correct.
Free
Multiple Choice
Q 213Q 213
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
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.
Free
Multiple Choice
Q 214Q 214
Figure 8-7
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-7.Which of the following statements is correct?
A) The loss of producer surplus that is associated with some sellers dropping out of the market as a result of the tax is $30.
B) The loss of consumer surplus for those buyers of the good who continue to buy it after the tax is imposed is $60.
C) The loss of consumer surplus caused by this tax exceeds the loss of producer surplus caused by this tax.
D) This tax produces $200 in tax revenue for the government.
Free
Multiple Choice
Q 215Q 215
Figure 8-7
The vertical distance between points A and B represents a tax in the market.
-Refer to Figure 8-7.The deadweight loss associated with this tax amounts to
A) $60,and this figure represents the amount by which tax revenue to the government exceeds the combined loss of producer and consumer surpluses.
B) $60,and this figure represents the surplus that is lost because the tax discourages mutually advantageous trades between buyers and sellers.
C) $40,and this figure represents the amount by which tax revenue to the government exceeds the combined loss of producer and consumer surpluses.
D) $40,and this figure represents the surplus that is lost because the tax discourages mutually advantageous trades between buyers and sellers.
Free
Multiple Choice
Q 216Q 216
Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.
-Refer to Figure 8-8.The tax causes consumer surplus to decrease by the area
A) A.
B) B+C.
C) A+B+C.
D) A+B+C+D+F.
Free
Multiple Choice
Q 217Q 217
Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.
-Refer to Figure 8-8.After the tax goes into effect,consumer surplus is the area
A) A.
B) B+C.
C) A+B+C.
D) A+B+D+J+K.
Free
Multiple Choice
Q 218Q 218
Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.
-Refer to Figure 8-8.The tax causes producer surplus to decrease by the area
A) D+F.
B) D+F+G.
C) D+F+J.
D) D+F+G+H.
Free
Multiple Choice
Q 219Q 219
Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.
-Refer to Figure 8-8.After the tax goes into effect,producer surplus is the area
A) D+F+G+H+J.
B) D+F+G+H.
C) D+F+J.
D) J.
Free
Multiple Choice
Q 220Q 220
Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.
-Refer to Figure 8-8.The government collects tax revenue that is the area
A) L.
B) B+D.
C) C+F.
D) F+G+L.
Free
Multiple Choice
Q 221Q 221
Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.
-Refer to Figure 8-8.The decrease in consumer and producer surpluses that is not offset by tax revenue is the area
A) C.
B) F.
C) G.
D) C+F.
Free
Multiple Choice
Q 222Q 222
Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.
-Refer to Figure 8-8.The deadweight loss of the tax is the area
A) B+D.
B) C+F.
C) A+C+F+J.
D) B+C+D+F.
Free
Multiple Choice
Q 223Q 223
Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.
-Refer to Figure 8-8.One effect of the tax is to
A) reduce consumer surplus from $60 to $24.
B) reduce producer surplus from $32 to $8.
C) create a deadweight loss of $24.
D) All of the above are correct.
Free
Multiple Choice
Q 224Q 224
Figure 8-8
Suppose the government imposes a $10 per unit tax on a good.
-Refer to Figure 8-8.One effect of the tax is to
A) reduce consumer surplus by $36.
B) reduce producer surplus by $24.
C) create a deadweight loss of $20.
D) All of the above are correct.
Free
Multiple Choice
Q 225Q 225
Scenario 8-1
Claudia would be willing to pay as much as $100 per week to have her house cleaned.John's opportunity cost of cleaning Claudia's house is $70 per week.
-Refer to Scenario 8-1.If Claudia pays John $80 to clean her house,Claudia's consumer surplus is
A) $80.
B) $30.
C) $20.
D) $10.
Free
Multiple Choice
Q 226Q 226
Scenario 8-1
Claudia would be willing to pay as much as $100 per week to have her house cleaned.John's opportunity cost of cleaning Claudia's house is $70 per week.
-Refer to Scenario 8-1.If John cleans Claudia's house for $80,John's producer surplus is
A) $80.
B) $30.
C) $20.
D) $10.
Free
Multiple Choice
Q 227Q 227
Scenario 8-1
Claudia would be willing to pay as much as $100 per week to have her house cleaned.John's opportunity cost of cleaning Claudia's house is $70 per week.
-Refer to Scenario 8-1.Assume Claudia 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?
A) Claudia will now clean her own house.
B) John will continue to clean Claudia's house,but his producer surplus will decline.
C) Total economic welfare (consumer surplus plus producer surplus plus tax revenue)will increase.
D) Claudia will continue to hire John to clean her house,but her consumer surplus will decline.
Free
Multiple Choice
Q 228Q 228
Scenario 8-1
Claudia would be willing to pay as much as $100 per week to have her house cleaned.John's opportunity cost of cleaning Claudia's house is $70 per week.
-Refer to Scenario 8-1.Assume Claudia is required to pay a tax of $15 when she hires someone to clean her house.Which of the following is true?
A) Claudia will continue to hire John to clean her house,but her consumer surplus will decline.
B) John will continue to clean Claudia's house,but his producer surplus will decline.
C) Total economic welfare (consumer surplus plus producer surplus plus tax revenue)will decrease.
D) All of the above are correct.
Free
Multiple Choice
Q 229Q 229
Scenario 8-2
Tom mows Stephanie's lawn for $25.Tom's opportunity cost of mowing Stephanie's lawn is $20,and Stephanie's willingness to pay Tom to mow her lawn is $28.
-Refer to Scenario 8-2.If Stephanie hires Tom to mow her lawn,Stephanie's consumer surplus is
A) $3.
B) $5.
C) $8.
D) $25.
Free
Multiple Choice
Q 230Q 230
Scenario 8-2
Tom mows Stephanie's lawn for $25.Tom's opportunity cost of mowing Stephanie's lawn is $20,and Stephanie's willingness to pay Tom to mow her lawn is $28.
-Refer to Scenario 8-2.If Stephanie hires Tom to mow her lawn,Tom's producer surplus is
A) $2.
B) $3.
C) $5.
D) $25.
Free
Multiple Choice
Q 231Q 231
Scenario 8-2
Tom mows Stephanie's lawn for $25.Tom's opportunity cost of mowing Stephanie's lawn is $20,and Stephanie's willingness to pay Tom to mow her lawn is $28.
-Refer to Scenario 8-2.Assume that Tom is required to pay a tax of $3 each time he mows a lawn.Which of the following results is most likely?
A) Stephanie now will decide to mow her own lawn,and Tom will decide it is no longer in his interest to mow Stephanie's lawn.
B) Stephanie is willing to pay Tom to mow her lawn,but Tom will decline her offer.
C) Tom is willing to mow Stephanie's lawn,but Stephanie will decide to mow her own lawn.
D) Tom and Stephanie still can engage in a mutually-agreeable trade.
Free
Multiple Choice
Q 232Q 232
Scenario 8-2
Tom mows Stephanie's lawn for $25.Tom's opportunity cost of mowing Stephanie's lawn is $20,and Stephanie's willingness to pay Tom to mow her lawn is $28.
-Refer to Scenario 8-2.Assume Tom is required to pay a tax of $10 each time he mows a lawn.Which of the following results is most likely?
A) Stephanie now will decide to mow her own lawn,and Tom will decide it is no longer in his interest to mow Stephanie's lawn.
B) Stephanie still is willing to pay Tom to mow her lawn,but Tom will decline her offer.
C) Tom still is willing to mow Stephanie's lawn,but Stephanie will decide to mow her own lawn.
D) Tom and Stephanie still can engage in a mutually-agreeable trade.
Free
Multiple Choice
Q 233Q 233
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 $800 and decreases producer surplus by $700.The deadweight loss from the tax is
A) $500.
B) $1,000.
C) $1,500.
D) $2,000.
Free
Multiple Choice
Q 234Q 234
Suppose a tax of $4 per unit is imposed on a good,and the tax causes the equilibrium quantity of the good to decrease from 2,000 units to 1,700 units.The tax decreases consumer surplus by $3,000 and decreases producer surplus by $4,400.The deadweight loss of the tax is
A) $200.
B) $400.
C) $600.
D) $1,200.
Free
Multiple Choice
Q 235Q 235
Suppose a tax of $3 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 $3,900 and decreases producer surplus by $3,000.The tax generates tax revenue of $6,000.The tax decreased the equilibrium quantity of the good from
A) 2,000 to 1,500.
B) 2,400 to 2,000.
C) 2,600 to 2,000.
D) 3,000 to 2,400.
Free
Multiple Choice
Q 236Q 236
Suppose a tax of $5 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 and decreases producer surplus by $15,000.The deadweight loss of the tax is $2,500.The tax decreased the equilibrium quantity of the good from
A) 6,500 to 5,500.
B) 5,500 to 4,500.
C) 5,000 to 3,000.
D) 6,000 to 4,000.
Free
Multiple Choice
Q 237Q 237
A tax of $0.25 is imposed on each bag of potato chips that is sold.The tax decreases producer surplus by $600 per day,generates tax revenue of $1,220 per day,and decreases the equilibrium quantity of potato chips by 120 bags per day.The tax
A) decreases consumer surplus by $645 per day.
B) decreases the equilibrium quantity from 6,000 bags per day to 5,880 bags per day.
C) decreases total surplus from $3,000 to $1,800 per day.
D) creates a deadweight loss of $15 per day.
Free
Multiple Choice
Q 238Q 238
David walks Carolyn's dog once a day for $50 per week.Carolyn values this service at $60 per week,while the opportunity cost of David's time is $30 per week.The government places a tax of $35 per week on dog walkers.Before the tax,what is the total surplus?
A) $60
B) $50
C) $30
D) $25
Free
Multiple Choice
Q 239Q 239
David walks Carolyn's dog once a day for $50 per week.Carolyn values this service at $60 per week,while the opportunity cost of David's time is $30 per week.The government places a tax of $35 per week on dog walkers.After the tax,what is the loss in total surplus?
A) $50
B) $30
C) $25
D) $0
Free
Multiple Choice
Q 240Q 240
David walks Carolyn's dog once a day for $50 per week.Carolyn values this service at $60 per week,while the opportunity cost of David's time is $30 per week.The government places a tax of $35 per week on dog walkers.After the tax,what is the total surplus?
A) $50
B) $30
C) $25
D) $0
Free
Multiple Choice
Q 241Q 241
Diana is a personal trainer whose client Charles pays $80 per hour-long session.Charles values this service at $100 per hour,while the opportunity cost of Diana's time is $75 per hour.The government places a tax of $10 per hour on personal trainers.Before the tax,what is the total surplus?
A) $25
B) $20
C) $5
D) $0
Free
Multiple Choice
Q 242Q 242
Diana is a personal trainer whose client Charles pays $80 per hour-long session.Charles values this service at $100 per hour,while the opportunity cost of Diana's time is $75 per hour.The government places a tax of $10 per hour on personal trainers.After the tax,what is likely to happen in the market for personal training?
A) Diana and Charles will agree to a new price somewhere between $85 and $100.
B) Diana and Charles will agree to a new price somewhere between $70 and $110.
C) Diana will no longer offer personal training services to Charles because she must charge more than $100 in order to cover her opportunity costs and pay the tax.
D) The price will remain at $80,and Diana will pay the $10 tax.
Free
Multiple Choice
Q 243Q 243
The price elasticities of supply and demand affect
A) both the size of the deadweight loss from a tax and the tax incidence.
B) the size of the deadweight loss from a tax but not the tax incidence.
C) the tax incidence but not the size of the deadweight loss from a tax.
D) neither the size of the deadweight loss from a tax nor the tax incidence.
Free
Multiple Choice
Q 244Q 244
The size of the deadweight loss generated from a tax is affected by the
A) elasticities of both supply and demand.
B) elasticity of demand only.
C) elasticity of supply only.
D) total revenue collected by the government.
Free
Multiple Choice
Q 245Q 245
The size of a tax and the deadweight loss that results from the tax are
A) positively related.
B) negatively related.
C) independent of each other.
D) equal to each other.
Free
Multiple Choice
Q 246Q 246
Buyers of a product will bear the larger part of the tax burden,and sellers will bear a smaller part of the tax burden,when the
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.
Free
Multiple Choice
Q 247Q 247
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
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.
Free
Multiple Choice
Q 248Q 248
When a tax is imposed on a good for which the supply is relatively elastic and the demand is relatively inelastic,
A) buyers of the good will bear most of the burden of the tax.
B) sellers of the good will bear most of the burden of the tax.
C) buyers and sellers will each bear 50 percent of the burden of the tax.
D) both equilibrium price and quantity will increase.
Free
Multiple Choice
Q 249Q 249
When a tax is imposed on a good for which both demand and supply are very elastic,
A) sellers effectively pay the majority of the tax.
B) buyers effectively pay the majority of the tax.
C) the tax burden is equally divided between buyers and sellers.
D) None of the above is correct;further information would be required to determine how the burden of the tax is distributed between buyers and sellers.
Free
Multiple Choice
Q 250Q 250
Which of the following statements is correct regarding the imposition of a tax on gasoline?
A) The incidence of the tax depends upon whether the buyers or the sellers are required to remit tax payments to the government.
B) The incidence of the tax depends upon the price elasticities of demand and supply.
C) The amount of tax revenue raised by the tax depends upon whether the buyers or the sellers are required to remit tax payments to the government.
D) The amount of tax revenue raised by the tax does not depend upon the amount of the tax per unit.
Free
Multiple Choice
Q 251Q 251
When a good is taxed,the burden of the tax
A) falls more heavily on the side of the market that is more elastic.
B) falls more heavily on the side of the market that is more inelastic.
C) falls more heavily on the side of the market that is closer to unit elastic.
D) is distributed independently of relative elasticities of supply and demand.
Free
Multiple Choice
Q 252Q 252
The deadweight loss from a $1 tax will be smallest in a market with
A) inelastic supply and elastic demand.
B) inelastic supply and inelastic demand.
C) elastic supply and elastic demand.
D) elastic supply and inelastic demand.
Free
Multiple Choice
Q 253Q 253
The deadweight loss from a $2 tax will be smallest in a market with
A) elastic demand and elastic supply.
B) elastic demand and inelastic supply.
C) inelastic demand and elastic supply.
D) inelastic demand and inelastic supply.
Free
Multiple Choice
Q 254Q 254
The deadweight loss from a $3 tax will be largest in a market with
A) inelastic supply and elastic demand.
B) inelastic supply and inelastic demand.
C) elastic supply and elastic demand.
D) elastic supply and inelastic demand.
Free
Multiple Choice
Q 255Q 255
Suppose a tax of $1 per unit is imposed on a good.The more elastic the supply of the good,other things equal,the
A) smaller is the response of quantity supplied to the tax.
B) larger is the tax burden on sellers relative to the tax burden on buyers.
C) larger is the deadweight loss of the tax.
D) All of the above are correct.
Free
Multiple Choice
Q 256Q 256
Suppose a tax of $1 per unit is imposed on a good.The more elastic the demand for the good,other things equal,
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.
Free
Multiple Choice
Q 257Q 257
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 allow the government to minimize the deadweight loss(es)from the tax?
A) market A only
B) markets A and C only
C) markets B and D only
D) market C only
Free
Multiple Choice
Q 258Q 258
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?
A) market B only
B) markets A and C only
C) markets B and D only
D) market D only
Free
Multiple Choice
Q 259Q 259
Figure 8-9
-Refer to Figure 8-9.Which of the following combinations will minimize the deadweight loss from a tax?
A) supply 1 and demand 1
B) supply 2 and demand 2
C) supply 1 and demand 2
D) supply 2 and demand 1
Free
Multiple Choice
Q 260Q 260
Figure 8-9
-Refer to Figure 8-9.Which of the following combinations will maximize the deadweight loss from a tax?
A) supply 1 and demand 1
B) supply 2 and demand 2
C) supply 1 and demand 2
D) supply 2 and demand 1
Free
Multiple Choice
Q 261Q 261
Figure 8-9
-Refer to Figure 8-9.Which of the following statements is correct?
A) Supply 1 is more elastic than supply 2.
B) Demand 2 is more elastic than demand 1.
C) Demand 1 is more elastic than supply 1.
D) All of the above are correct.
Free
Multiple Choice
Q 262Q 262
Figure 8-9
-Refer to Figure 8-9.Which of the following statements is not correct?
A) Supply 2 is more elastic than supply 1.
B) Demand 2 is more elastic than demand 1.
C) Supply 1 is more inelastic than supply 2.
D) Demand 2 is more inelastic than supply 2.
Free
Multiple Choice
Q 263Q 263
Suppose that the government imposes a tax on dairy products.The deadweight loss from this tax will likely be greater in the
A) first year after it is imposed than in the fifth year after it is imposed because demand and supply will be more elastic in the first year than in the fifth year.
B) first year after it is imposed than in the fifth year after it is imposed because demand and supply will be less elastic in the first year than in the fifth year.
C) fifth year after it is imposed than in the first year after it is imposed because demand and supply will be more elastic in the first year than in the fifth year.
D) fifth year after it is imposed than in the first year after it is imposed because demand and supply will be less elastic in the first year than in the fifth year.
Free
Multiple Choice
Q 264Q 264
The demand for milk is more elastic than the demand for water.Suppose the government levies an equivalent tax on milk and water.The deadweight loss would be larger in the market for
A) milk than water because the quantity of milk would fall by more than the quantity of water.
B) milk than water because the quantity of water would fall by more than the quantity of milk.
C) water than milk because the quantity of milk would fall by more than the quantity of water.
D) water than milk because the quantity of water would fall by more than the quantity of milk.
Free
Multiple Choice
Q 265Q 265
The deadweight loss from a tax
A) does not vary in amount when the price elasticity of demand changes.
B) does not vary in amount when the amount of the tax per unit changes.
C) is larger,the larger is the amount of the tax per unit.
D) is smaller,the larger is the amount of the tax per unit.
Free
Multiple Choice
Q 266Q 266
Which of the following statements is correct regarding a tax on a good and the resulting deadweight loss?
A) The greater are the price elasticities of supply and demand,the greater is the deadweight loss.
B) The greater is the price elasticity of supply and the smaller is the price elasticity of demand,the greater is the deadweight loss.
C) The smaller are the decreases in quantity demanded and quantity supplied,the greater the deadweight loss.
D) The smaller is the wedge between the effective price to sellers and the effective price to buyers,the greater is the deadweight loss.
Free
Multiple Choice
Q 267Q 267
The amount of deadweight loss that results from a tax of a given size is determined by
A) whether the tax is levied on buyers or sellers.
B) the number of buyers in the market relative to the number of sellers.
C) the price elasticities of demand and supply.
D) the ratio of the tax per unit to the effective price received by sellers.
Free
Multiple Choice
Q 268Q 268
The amount of deadweight loss from a tax depends upon the
A) price elasticity of demand.
B) price elasticity of supply.
C) amount of the tax per unit.
D) All of the above are correct.
Free
Multiple Choice
Q 269Q 269
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?
A) After the tax is imposed,the equilibrium quantity of cigars is 900 per month.
B) The demand for cigars is more elastic than the supply of cigars.
C) The deadweight loss of the tax is $12.50.
D) The tax causes a decrease in consumer surplus of $380.
Free
Multiple Choice
Q 270Q 270
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?
A) The demand for cigars is less elastic than the supply of cigars.
B) The tax causes a decrease in consumer surplus of $390 and a decrease in producer surplus of $97.50.
C) The deadweight loss of the tax is $12.50.
D) All of the above are correct.
Free
Multiple Choice
Q 271Q 271
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?
A) Market A
B) Market B
C) The deadweight loss will be the same in both markets.
D) There is not enough information to answer the question.
Free
Multiple Choice
Q 272Q 272
Consider a good to which a per-unit tax applies.The greater the price elasticities of demand and supply for the good,the
A) smaller the deadweight loss from the tax.
B) greater the deadweight loss from the tax.
C) more efficient is the tax.
D) more equitable is the distribution of the tax burden between buyers and sellers.
Free
Multiple Choice
Q 273Q 273
Consider a good to which a per-unit tax applies.The size of the deadweight that results from the tax is smaller,the
A) larger is the price elasticity of demand.
B) smaller is the price elasticity of supply.
C) larger is the amount of the tax.
D) All of the above are correct.
Free
Multiple Choice
Q 274Q 274
Consider a good to which a per-unit tax applies.The size of the deadweight that results from the tax is smaller,the
A) less elastic is the demand for the good.
B) less elastic is the supply of the good.
C) smaller is the amount of the tax.
D) All of the above are correct.
Free
Multiple Choice
Q 275Q 275
Assume the price of gasoline is $2.00 per gallon,and the equilibrium quantity of gasoline is 10 million gallons per day with no tax on gasoline.Starting from this initial situation,which of the following scenarios would result in the largest deadweight loss?
A) The price elasticity of demand for gasoline is 0.1;the price elasticity of supply for gasoline is 0.6;and the gasoline tax amounts to $0.20 per gallon.
B) The price elasticity of demand for gasoline is 0.1;the price elasticity of supply for gasoline is 0.4;and the gasoline tax amounts to $0.20 per gallon.
C) The price elasticity of demand for gasoline is 0.2;the price elasticity of supply for gasoline is 0.6;and the gasoline tax amounts to $0.30 per gallon.
D) There is insufficient information to make this determination.
Free
Multiple Choice
Q 276Q 276
Assume the price of gasoline is $2.40 per gallon,and the equilibrium quantity of gasoline is 12 million gallons per day with no tax on gasoline.Starting from this initial situation,which of the following scenarios would result in the largest deadweight loss?
A) A 10 percent increase in the price of gasoline reduces the quantity of gasoline demanded by 2 percent and it increases the quantity of gasoline supplied by 5 percent;and the tax on gasoline amounts to $0.40 per gallon.
B) A 10 percent increase in the price of gasoline reduces the quantity of gasoline demanded by 2 percent and it increases the quantity of gasoline supplied by 7 percent;and the tax on gasoline amounts to $0.40 per gallon.
C) A 10 percent increase in the price of gasoline reduces the quantity of gasoline demanded by 1 percent and it increases the quantity of gasoline supplied by 8 percent;and the tax on gasoline amounts to $0.35 per gallon.
D) There is insufficient information to make this determination.
Free
Multiple Choice
Q 277Q 277
Other things equal,the deadweight loss of a tax
A) decreases as the size of the tax increases.
B) increases as the size of the tax increases,but the increase in the deadweight loss is less rapid than the increase in the size of the tax.
C) increases as the size of the tax increases,and the increase in the deadweight loss is more rapid than the increase in the size of the tax.
D) increases as the price elasticities of demand and/or supply increase,but the deadweight loss does not change as the size of the tax increases.
Free
Multiple Choice
Q 278Q 278
Economists generally agree that the most important tax in the U.S.economy is the
A) income tax.
B) tax on labor.
C) inheritance or death tax.
D) tax on corporate profits.
Free
Multiple Choice
Q 279Q 279
Economists generally agree that the most important tax in the U.S.economy is the
A) investment tax.
B) sales tax.
C) property tax.
D) labor tax.
Free
Multiple Choice
Q 280Q 280
Which of the following is a tax on labor?
A) Medicare tax
B) Social Security tax
C) federal income tax
D) All of the above are labor taxes.
Free
Multiple Choice
Q 281Q 281
Which of the following is a tax on labor?
A) Medicare tax
B) inheritance tax
C) sales tax
D) All of the above are labor taxes.
Free
Multiple Choice
Q 282Q 282
Labor taxes may distort labor markets greatly if
A) labor supply is highly inelastic.
B) many workers choose to work 40 hours per week regardless of their earnings.
C) the number of hours many part-time workers want to work is very sensitive to the wage rate.
D) "underground" workers do not respond to changes in the wages of legal jobs because they prefer not to pay taxes.
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Multiple Choice
Q 283Q 283
Economists disagree on whether labor taxes cause small or large deadweight losses.This disagreement arises primarily because economists hold different views about
A) the size of labor taxes.
B) the importance of labor taxes imposed by the federal government relative to the importance of labor taxes imposed by the various states.
C) the elasticity of labor supply.
D) the elasticity of labor demand.
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Multiple Choice
Q 284Q 284
Taxes on labor have the effect of encouraging
A) workers to work more hours.
B) the elderly to postpone retirement.
C) second earners within a family to take a job.
D) unscrupulous people to take part in the underground economy.
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Multiple Choice
Q 285Q 285
Concerning the labor market and taxes on labor,economists disagree about
A) the size of the tax on labor.
B) the size of the deadweight loss of the tax on labor.
C) whether or not a tax on labor places a wedge between the wage that firms pay and the wage that workers receive.
D) All of the above are correct.
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Multiple Choice
Q 286Q 286
The Social Security tax is a tax on
A) capital.
B) labor.
C) consumption expenditures.
D) earnings during retirement.
Free
Multiple Choice
Q 287Q 287
If the labor supply curve is nearly vertical,a tax on labor
A) has a large deadweight loss.
B) raises a small amount of tax revenue.
C) has little impact on the amount of work that workers are willing to do.
D) results in a large tax burden on the firms that hire labor.
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Multiple Choice
Q 288Q 288
If the labor supply curve is very elastic,a tax on labor
A) has a large deadweight loss.
B) raises enough tax revenue to offset the loss in welfare.
C) has a relatively small impact on the number of hours that workers choose to work.
D) results in a large tax burden on the firms that hire labor.
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Multiple Choice
Q 289Q 289
The marginal tax rate on labor income for many workers in the United States is almost
A) 30 percent.
B) 40 percent.
C) 50 percent.
D) 65 percent.
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Multiple Choice
Q 290Q 290
The more freedom young mothers have to work outside the home,the
A) more elastic the supply of labor will be.
B) less elastic the supply of labor will be.
C) more vertical the labor supply curve will be.
D) smaller is the decrease in employment that will result from a tax on labor.
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Multiple Choice
Q 291Q 291
The more freedom people are given to choose the date of their retirement,the
A) more elastic is the supply of labor.
B) less elastic is the supply of labor.
C) steeper is the labor supply curve.
D) smaller is the decrease in employment that will result from a tax on labor.
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Multiple Choice
Q 292Q 292
Taxes on labor encourage all of the following except
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."
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Multiple Choice
Q 293Q 293
Taxes on labor encourage which of the following?
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 jobs
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Multiple Choice
Q 294Q 294
As more people become self-employed,which allows them to determine how many hours they work per week,we would expect the deadweight loss from the Social Security tax to
A) increase,and the revenue generated from the tax to increase.
B) increase,and the revenue generated from the tax to decrease.
C) decrease,and the revenue generated from the tax to increase.
D) decrease,and the revenue generated from the tax to decrease.
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Multiple Choice
Q 295Q 295
A decrease in the size of a tax is most likely to increase tax revenue in a market with
A) elastic demand and elastic supply.
B) elastic demand and inelastic supply.
C) inelastic demand and elastic supply.
D) inelastic demand and inelastic supply.
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Multiple Choice
Q 296Q 296
An increase in the size of a tax is most likely to increase tax revenue in a market with
A) elastic demand and elastic supply.
B) elastic demand and inelastic supply.
C) inelastic demand and elastic supply.
D) inelastic demand and inelastic supply.
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Multiple Choice
Q 297Q 297
If the size of a tax increases,tax revenue
A) increases.
B) decreases.
C) remains the same.
D) may increase,decrease,or remain the same.
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Multiple Choice
Q 298Q 298
Suppose the tax on liquor is increased so that the tax goes from being a "medium" tax to being a "large" tax.As a result,it is likely that
A) tax revenue increases,and the deadweight loss increases.
B) tax revenue increases,and the deadweight loss decreases.
C) tax revenue decreases,and the deadweight loss increases.
D) tax revenue decreases,and the deadweight loss decreases.
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Multiple Choice
Q 299Q 299
Figure 8-10
The vertical distance between points A and B represents the original tax.
-Refer to Figure 8-10.If the government changed the per-unit tax from $5.00 to $2.50,then the price paid by buyers would be $7.50,the price received by sellers would be $5,and the quantity sold in the market would be 1.5 units.Compared to the original tax rate,this lower tax rate would
A) increase government revenue and increase the deadweight loss from the tax.
B) increase government revenue and decrease the deadweight loss from the tax.
C) decrease government revenue and increase the deadweight loss from the tax.
D) decrease government revenue and decrease the deadweight loss from the tax.
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Multiple Choice
Q 300Q 300
Figure 8-10
The vertical distance between points A and B represents the original tax.
-Refer to Figure 8-10.If the government changed the per-unit tax from $5.00 to $7.50,then the price paid by buyers would be $10.50,the price received by sellers would be $3,and the quantity sold in the market would be 0.5 units.Compared to the original tax rate,this higher tax rate would
A) increase government revenue and increase the deadweight loss from the tax.
B) increase government revenue and decrease the deadweight loss from the tax.
C) decrease government revenue and increase the deadweight loss from the tax.
D) decrease government revenue and decrease the deadweight loss from the tax.
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Multiple Choice
Q 301Q 301
Figure 8-10
The vertical distance between points A and B represents the original tax.
-Refer to Figure 8-10.The original tax can be represented by the vertical distance AB.Suppose the government is deciding whether to lower the tax to CD or raise it to FG.Which of the following statements is correct?
A) Compared to the original tax,the larger tax will decrease both tax revenue and deadweight loss.
B) Compared to the original tax,the smaller tax will increase both tax revenue and deadweight loss.
C) Compared to the original tax,the larger tax will decrease tax revenue and increase deadweight loss.
D) Both a and b are correct.
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Multiple Choice
Q 302Q 302
Figure 8-10
The vertical distance between points A and B represents the original tax.
-Refer to Figure 8-10.The original tax can be represented by the vertical distance AB.Suppose the government is deciding whether to lower the tax to CD or raise it to FG.Which of the following statements is not correct?
A) Compared to the original tax,the larger tax will increase tax revenue.
B) Compared to the original tax,the smaller tax will decrease deadweight loss.
C) Compared to the original tax,the smaller tax will decrease tax revenue.
D) Compared to the original tax,the larger tax will increase deadweight loss.
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Multiple Choice
Q 303Q 303
As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on,the
A) tax revenue increases at first,but it eventually peaks and then decreases.
B) deadweight loss increases at first,but it eventually peaks and then decreases.
C) tax revenue always increases,and the deadweight loss always increases.
D) tax revenue always decreases,and the deadweight loss always increases.
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Multiple Choice
Q 304Q 304
Which of the following ideas is the most plausible?
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.
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Multiple Choice
Q 305Q 305
Which of the following statements is true for markets in which the demand curve slopes downward and the supply curve slopes upward?
A) As the size of the tax increases,tax revenue continually rises and deadweight loss continually falls.
B) As the size of the tax increases,tax revenue and deadweight loss rise initially,but both eventually begin to fall.
C) As the size of the tax increases,tax revenue rises initially,but it eventually begins to fall;deadweight loss continually rises.
D) As the size of the tax increases,tax revenue rises initially,but it eventually begins to fall;deadweight loss falls initially,but eventually it begins to rise.
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Multiple Choice
Q 306Q 306
In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue?
A) The price elasticity of demand is small,and the price elasticity of supply is large.
B) The price elasticity of demand is large,and the price elasticity of supply is small.
C) The price elasticity of demand and the price elasticity of supply are both small.
D) The price elasticity of demand and the price elasticity of supply are both large.
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Multiple Choice
Q 307Q 307
Which of the following statements correctly describes the relationship between the size of the deadweight loss and the amount of tax revenue as the size of a tax increases from a small tax to a medium tax and finally to a large tax?
A) Both the size of the deadweight loss and tax revenue increase.
B) The size of the deadweight loss increases,but the tax revenue decreases.
C) The size of the deadweight loss increases,but the tax revenue first increases,then decreases.
D) Both the size of the deadweight loss and tax revenue decrease.
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Multiple Choice
Q 308Q 308
Suppose the government increases the size of a tax by 25 percent.The deadweight loss from that tax
A) increases by 25 percent.
B) increases by more than 25 percent.
C) increases but by less than 25 percent.
D) decreases by 25 percent.
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Multiple Choice
Q 309Q 309
If the tax on a good is doubled,the deadweight loss of the tax
A) increases by 50 percent.
B) doubles.
C) triples.
D) quadruples.
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Multiple Choice
Q 310Q 310
If the tax on a good is doubled,the deadweight loss of the tax
A) remains constant.
B) doubles.
C) quadruples.
D) increases by a percentage that cannot be determined without further information.
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Multiple Choice
Q 311Q 311
If the tax on a good is increased from $0.10 per unit to $0.40 per unit,the deadweight loss from the tax
A) remains constant.
B) increases by a factor of 4.
C) increases by a factor of 9.
D) increases by a factor of 16.
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Multiple Choice
Q 312Q 312
If the tax on a good is increased from $1 per unit to $3 per unit,the deadweight loss from the tax increases by a factor of
A) 2
B) 3
C) 9
D) 18
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Multiple Choice
Q 313Q 313
Suppose a tax of $0.50 per unit on a good creates a deadweight loss of $100.If the tax is increased to $2.50 per unit,the deadweight loss from the new tax would be
A) $200.
B) $250.
C) $500.
D) $2,500.
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Multiple Choice
Q 314Q 314
Suppose a tax of $0.10 per unit on a good creates a deadweight loss of $100.If the tax is increased to $0.30 per unit,the deadweight loss from the new tax would be
A) $200.
B) $300.
C) $900.
D) $9,000.
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Multiple Choice
Q 315Q 315
In which of the following instances would the deadweight loss of the tax on airline tickets increase by a factor of 9?
A) The tax on airline tickets increases from $20 per ticket to $60 per ticket.
B) The tax on airline tickets increases from $20 per ticket to $90 per ticket.
C) The tax on airline tickets increases from $15 per ticket to $60 per ticket.
D) The tax on airline tickets increases from $15 per ticket to $135 per ticket.
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Multiple Choice
Q 316Q 316
In which of the following instances would the deadweight loss of the tax on cartons of cigarettes increase by a factor of 9?
A) The tax on cartons of cigarettes increases from $10 to $11.11.
B) The tax on cartons of cigarettes increases from $10 to $20.
C) The tax on cartons of cigarettes increases from $10 to $30.
D) The tax on cartons of cigarettes increases from $10 to $90.
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Multiple Choice
Q 317Q 317
Which of the following events is consistent with an increase in the deadweight loss of the gasoline tax from $30 million to $120 million?
A) The tax on gasoline increases from $0.30 per gallon to $0.45 per gallon.
B) The tax on gasoline increases from $0.30 per gallon to $0.60 per gallon.
C) The tax on gasoline increases from $0.25 per gallon to $0.45 per gallon.
D) The tax on gasoline increases from $0.25 per gallon to $1.00 per gallon.
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Multiple Choice
Q 318Q 318
Assume that for good X the supply curve for a good is a typical,upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.If the good is taxed,and the tax is doubled,the
A) base of the triangle that represents the deadweight loss quadruples.
B) height of the triangle that represents the deadweight loss doubles.
C) deadweight loss of the tax doubles.
D) All of the above are correct.
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Multiple Choice
Q 319Q 319
Assume that for good X the supply curve for a good is a typical,upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.If the good is taxed,and the tax is doubled,the
A) base of the triangle that represents the deadweight loss doubles.
B) height of the triangle that represents the deadweight loss doubles.
C) deadweight loss of the tax quadruples.
D) All of the above are correct.
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Multiple Choice
Q 320Q 320
Assume that for good X the supply curve for a good is a typical,upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.If the good is taxed,and the tax is tripled,the
A) base of the triangle that represents the deadweight loss triples.
B) height of the triangle that represents the deadweight loss triples.
C) deadweight loss of the tax increases by a factor of nine.
D) All of the above are correct.
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Multiple Choice
Q 321Q 321
Suppose the tax on gasoline is raised from $0.50 per gallon to $2.50 per gallon.As a result,
A) tax revenue necessarily increases.
B) the deadweight loss of the tax necessarily increases.
C) the supply curve for gasoline necessarily becomes steeper.
D) All of the above are correct.
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Multiple Choice
Q 322Q 322
Henry George argued that the government should raise
A) all of its revenue from a tax on land.
B) all of its revenue from taxes on labor.
C) most of its revenue from consumption taxes.
D) tax revenue from multiple and diverse taxes.
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Multiple Choice
Q 323Q 323
Since the amount of land is fixed,the total supply of land is
A) relatively elastic.
B) perfectly elastic.
C) perfectly inelastic.
D) relatively inelastic.
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Multiple Choice
Q 324Q 324
If the supply of land is fixed,the burden of a tax on land falls
A) partly on landowners and partly on users of land.
B) entirely on the renters or users of land.
C) entirely on workers.
D) entirely on landowners.
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Multiple Choice
Q 325Q 325
A tax on raw land causes
A) a large deadweight loss.
B) no deadweight loss.
C) landlords to bear none of the burden of the tax.
D) the generation of such a large amount of tax revenue that all other taxes could be eliminated.
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Multiple Choice
Q 326Q 326
Which of the following statements about a land tax is correct?
A) A tax on raw land causes no deadweight loss.
B) Landowners bear the entire burden of a tax on raw land.
C) The government's tax revenue exactly equals the loss of the landowners.
D) All of the above are correct.
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Multiple Choice
Q 327Q 327
Which of the following statements about a land tax is correct?
A) A tax on raw land causes a small but positive deadweight loss.
B) Landowners and renters share the burden of a tax on raw land.
C) The government's tax revenue exactly equals the loss of the landowners.
D) The supply of improvements to land such as sewers and roads is perfectly inelastic.
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Multiple Choice
Q 328Q 328
Today's property tax
A) taxes only raw land.
B) is exactly the same as Henry George's single-tax proposal.
C) taxes land and the improvements to land.
D) has no deadweight loss since the amount of revenue going to the government equals the reduction in the landowners' surplus.
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Multiple Choice
Q 329Q 329
In order for Henry George's single tax on land not to distort economic incentives,the tax would have to be on
A) improvements to land.
B) land used for commercial purposes.
C) land used for residential purposes.
D) raw land.
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Multiple Choice
Q 330Q 330
In order for Henry George's land-tax argument to be valid,the land that is taxed must be
A) improved land.
B) productive land.
C) raw land.
D) urban land.
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Multiple Choice
Q 331Q 331
Unlike the supply of raw land,the supply of improvements
A) is perfectly inelastic.
B) has an elasticity that is greater than zero.
C) cannot be taxed,even if an attempt were made to tax it.
D) is exempt from taxation under current law.
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Multiple Choice
Q 332Q 332
If Henry George's single tax on land were applied today,
A) it would make the supply of land more elastic.
B) the deadweight loss would be much larger than the deadweight loss of alternative taxes.
C) the tax would not raise enough revenue to pay for government spending.
D) it would increase immigration and decrease technology.
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Multiple Choice
Q 333Q 333
According to the economist Milton Friedman,the "least bad" tax is a tax on
A) income received from profits and interest.
B) labor income.
C) the value of unimproved land.
D) the value of land including the improvements to the land.
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Multiple Choice
Q 334Q 334
Nobel Prize-winning economist Milton Friedman said that,"In my opinion,the least bad tax is the property tax on the unimproved value of land." Why?
A) Land owners can afford the tax better than other people.
B) A tax on unimproved land would be sufficient to fund government,so all other taxes could be abolished.
C) Such a tax could generate more government revenue than any tax on labor or capital.
D) A tax on unimproved land would have no deadweight loss.
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Multiple Choice
Q 335Q 335
Which of the following countries has the highest tax rate?
A) Italy
B) Canada
C) United States
D) Japan
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Multiple Choice
Q 336Q 336
In countries with higher tax rates,people tend to
A) have higher standards of living.
B) take fewer vacations.
C) work less.
D) pay less into Social Security.
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Multiple Choice
Q 337Q 337
Which of the following statements is correct?
A) According to the evidence from major industrial countries,there is no significant relationship between tax rates and the average number of hours worked per week.
B) In the early 1970s,the average French worker worked more hours per week than the average American worker;by the mid-1990s,the reverse was true.
C) Between the early 1970s and the mid-1990s,labor taxes in France decreased while labor taxes in the United States increased..
D) All of the above are correct.
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Multiple Choice
Q 338Q 338
Which of the following statements is correct?
A) In 2008,the combined Social Security-Medicare tax amounted to 15.3 percent of a worker's income.
B) The White House budget office has asserted that Social Security and Medicare have promised to pay out $18 trillion more in benefits than they will receive in revenue in coming decades.
C) If payroll taxes are increased to maintain current levels of Social Security and Medicare benefits,an expected result would be fewer hours worked per week by the average American worker.
D) All of the above are correct.
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Multiple Choice
Q 339Q 339
The higher a country's tax rates,the more likely that country will be
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.
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Multiple Choice
Q 340Q 340
According to Arthur Laffer,the graph that represents the amount of tax revenue (measured on the vertical axis)as a function of the size of the tax (measured on the horizontal axis)looks like
A) a U.
B) an upside-down U.
C) a horizontal straight line.
D) an upward-sloping line or curve.
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Multiple Choice
Q 341Q 341
The graph that represents the amount of deadweight loss (measured on the vertical axis)as a function of the size of the tax (measured on the horizontal axis)looks like
A) a U.
B) an upside-down U.
C) a horizontal straight line.
D) an upward-sloping curve.
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Multiple Choice
Q 342Q 342
Supply-side economics is a term associated with the views of
A) Ronald Reagan and Arthur Laffer.
B) Karl Marx.
C) Bill Clinton and Greg Mankiw.
D) Milton Friedman.
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Multiple Choice
Q 343Q 343
The Laffer curve relates
A) the tax rate to tax revenue raised by the tax.
B) the tax rate to the deadweight loss of the tax.
C) the price elasticity of supply to the deadweight loss of the tax.
D) government welfare payments to the birth rate.
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Multiple Choice
Q 344Q 344
Ronald Reagan believed that reducing income tax rates would
A) do little,if anything,to encourage hard work.
B) result in large increases in deadweight losses.
C) raise economic well-being and perhaps even tax revenue.
D) lower economic well-being,even though tax revenue could possibly increase.
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Multiple Choice
Q 345Q 345
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
A) California economics.
B) welfare economics.
C) supply-side economics.
D) elasticity economics.
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Multiple Choice
Q 346Q 346
Which of the following scenarios is not consistent with the Laffer curve?
A) The tax rate is very low,and tax revenue is very low.
B) The tax rate is very high,and tax revenue is very low.
C) The tax rate is very high,and tax revenue is very high.
D) The tax rate is moderate (between very high and very low),and tax revenue is relatively high.
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Multiple Choice
Q 347Q 347
When a country is on the downward-sloping side of the Laffer curves,a cut in the tax rate will
A) decrease tax revenue and decrease the deadweight loss.
B) decrease tax revenue and increase the deadweight loss.
C) increase tax revenue and decrease the deadweight loss.
D) increase tax revenue and increase the deadweight loss.
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Multiple Choice
Q 348Q 348
In the early 1980s,which of the following countries had a marginal tax rate of about 80 percent?
A) United States
B) Canada
C) Japan
D) Sweden
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Multiple Choice
Q 349Q 349
Which of the following ideas is the most plausible?
A) Reducing a high tax rate is less likely to increase tax revenue than is reducing a low tax rate.
B) Reducing a high tax rate is more likely to increase tax revenue than is reducing a low tax rate.
C) Reducing a high tax rate will have the same effect on tax revenue as reducing a low tax rate.
D) Reducing a tax rate can never increase tax revenue.
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Multiple Choice
Q 350Q 350
Which of the following would likely have the smallest deadweight loss relative to the tax revenue?
A) a head tax (that is,a tax everyone must pay regardless of what one does or buys)
B) an income tax
C) a tax on compact discs
D) a tax on caviar
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Multiple Choice
Q 351Q 351
When the government imposes taxes on buyers or sellers of a good,society
A) loses some of the benefits of market efficiency.
B) gains efficiency but loses equality.
C) is better off because the government's tax revenues exceed the deadweight loss.
D) moves from an elastic supply curve to an inelastic supply curve.
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Multiple Choice
Q 352Q 352
Taxes are costly to market participants because they
A) transfer resources from market participants to the government.
B) alter incentives.
C) distort market outcomes.
D) All of the above are correct.
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Multiple Choice
Q 353Q 353
Taxes are of interest to
A) microeconomists because they consider how to balance equality and efficiency.
B) microeconomists because they consider how best to design a tax system.
C) macroeconomists because they consider how policymakers can use the tax system to stabilize economic activity.
D) All of the above are correct.
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Multiple Choice