Question 1

If a tax is imposed on a product,the buyer will always bear the entire burden of the tax.

Accepted Answer

The burden of the tax can be shared by the buyer and the seller depending on the market conditions such as the price elasticity of demand and supply. In some cases, the seller may increase the price to pass on the tax burden to the buyer while in other cases, the seller may absorb some or all of the tax to remain competitive.

Question 2

Figure 4-12 
-Refer to Figure 4-12.The figure above represents demand and supply in the market for cigarettes.Use the diagram to answer the following questions.
a.How much is the government tax on each pack of cigarettes?
b.What portion of the unit tax is paid by consumers?
c.What portion of the unit tax is paid by producers?
d.What is the quantity sold after the imposition of the tax?
e.What is the after-tax revenue per pack received by producers?
f.What is the total tax revenue collected by the government?
g.What is the value of the excess burden of the tax?
h.Is this cigarette tax efficient?

Accepted Answer

The answer of Figure 4-12 
-Refer to Figure 4-12.The figure...

Question 3

If the price of garlic is represented by equation P = 25 - Q_D,then the corresponding quantity of garlic demanded is represented by the equation

Accepted Answer

To find the corresponding quantity demanded, we need to isolate Q_D on one side of the equation. Starting with the given equation: P = 25 - Q_D Add Q_D to both sides: P + Q_D = 25 Subtract P from both sides: Q_D = 25 - P Therefore, the equation for the corresponding quantity demanded is Q_D = 25 - P.

Question 4

If the quantity of tacos demanded is represented by the equation Q_D = 20 - 0.5P then the corresponding price of tacos is represented by the equation

Accepted Answer

To find the corresponding price equation, solve the given demand equation for P. Starting with Q_D = 20 - 0.5P, rearrange it to solve for P: P = 40 - 2(Q_D). This matches option B.

Question 5

An efficient tax is

Accepted Answer

An efficient tax is a tax that imposes a small excess burden relative to the tax revenue that it raises. This means that the cost of collecting the tax and any negative economic effects it has on the market are as low as possible relative to the revenue it generates. This type of tax is considered efficient because it minimizes the negative impact on the economy while still raising needed revenue for public goods and services.

Question 6

Economists have shown that the burden of a tax is

Accepted Answer

The burden of a tax, also known as tax incidence, depends on the relative elasticity of supply and demand rather than on who officially pays the tax. Therefore, the economic burden is the same whether the tax is collected from the buyer or the seller.

Question 7

If the quantity of hearing aids demanded is represented by the equation Q_D = 40 - P then the corresponding price of hearing aids is represented by the equation

Accepted Answer

To find the corresponding price of hearing aids, we need to isolate P on one side of the equation. We can do this by subtracting Q_D from both sides to get: P = 40 - Q_D. Therefore, the correct answer is B.

Question 8

Is there a difference between the "true burden" of a tax and who is legally required to pay a tax? Briefly explain.

Accepted Answer

The answer of Is there a difference between the "true...

Question 9

In the market for gasoline,an increase in the federal excise tax on gasoline would shift the supply curve up.

Accepted Answer

Increasing the federal excise tax on gasoline would increase the cost of production for gasoline suppliers, leading to a decrease in the quantity supplied at each price level. This would result in a shift of the supply curve upward.

Question 10

A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises.

Accepted Answer

An efficient tax raises revenue at a low cost, meaning that the additional economic costs it generates beyond the actual tax payment are minimal. This is measured by the excess burden, which is the loss of efficiency in the economy caused by the tax. Therefore, an efficient tax imposes a small excess burden relative to the revenue it raises.

Question 11

The following equations represent the demand and supply for kumquats. Q_D = 60 - 3P Q_S = -20 + 5P What is the equilibrium price (P)and quantity (Q - in thousands)of kumquats?

Accepted Answer

At equilibrium, Q_D = Q_S. Solving 60 - 3P = -20 + 5P gives P = $10. Substituting P = $10 into either equation gives Q = 30 thousand.

Question 12

"Taxes are what we pay for a civilized society." This statement was made by

Accepted Answer

This statement was made by Oliver Wendell Holmes, Jr., a former justice of the United States Supreme Court, in the 1904 case of Compañía General de Tabacos de Filipinas v. Collector of Internal Revenue.

Question 13

Using a supply and demand graph,illustrate the effect of an increase in the federal cigarette tax of $1.00 per pack,where the entire tax burden falls on the consumer.Assume the equilibrium price before the tax is $5.00 per pack and the equilibrium quantity is 30 million packs.
After the implementation of the tax,what are the equilibrium price and equilibrium quantity?

Accepted Answer

The answer of Using a supply and demand graph,illustrate the...

Question 14

If the price of toothpaste is represented by equation P = 40 - .5Q_D,then the corresponding quantity of toothpaste demanded is represented by the equation

Accepted Answer

To find the corresponding quantity demanded equation, solve the given price equation for Q. Starting with P = 40 - 0.5Q, rearrange to get Q on one side: 0.5Q = 40 - P, then multiply everything by 2 to solve for Q: Q = 80 - 2P.

Question 15

For most goods and services,the burden of a tax is on the sellers.

Accepted Answer

The burden of a tax on goods and services is typically shared between buyers and sellers, depending on the relative elasticities of supply and demand.

Question 16

The following equations represent the demand and supply for bird feeders. Q_D = 35 - P Q_S = -5 + 3P What is the equilibrium price (P)and quantity (Q - in thousands)of bird feeders?

Accepted Answer

To find the equilibrium price and quantity, set the demand equation equal to the supply equation: 35 - P = -5 + 3P. Solving this gives P = $10. Substituting P = $10 into either equation gives Q = 25 thousand.

Question 17

Article Summary
Voters in California approved a $2 per pack tax increase on cigarettes,which went into effect on April 1,2017.Cigarette taxes are now $2.87 per pack in California,the ninth highest cigarette tax in the country.Approximately one-in-nine adults in California are smokers,and the tax increase is estimated to generate almost $1.4 billion in revenue during the first year,with the revenue designated for the state-run health care plan as well as various state-wide anti-smoking campaigns.
Source: Andrew Blake,"Cigarette tax hike takes effect in California,costs surge by $2 per pack," Washington Times,April 1,2017.
-Refer to the Article Summary.The additional tax of $2 per pack of cigarettes will have which of the following effects on the market for cigarettes in California?

Accepted Answer

The tax increase will increase the price of cigarettes, leading to a decrease in demand and a decrease in consumer surplus.

Question 18

Employers withhold several taxes from employees ' paychecks,one of which is FICA.Congress requires employers to pay half of the FICA tax and workers to pay the other half.Does this mean that the burden of the FICA tax falls evenly on employers and employees? Briefly explain.

Accepted Answer

The answer of Employers withhold several taxes from employees '...

Question 19

If buyers were required to pay the federal excise tax on gasoline directly to the government,the demand curve for gasoline would shift up.

Accepted Answer

The demand curve for gasoline would not shift up if buyers were required to pay the federal excise tax on gasoline directly to the government. The demand curve would remain the same because the tax is not affecting the quantity demanded of gasoline, but rather the price paid by buyers. The price that buyers pay would simply increase to reflect the tax, but the quantity demanded would remain the same.

Question 20

The division of the burden of a tax between buyers and sellers in a market is called tax incidence.

Accepted Answer

Tax incidence refers to how the burden of a tax is divided between buyers and sellers in a market. Therefore, the statement is true.

Quiz 4: Economic Efficiency, Government Price Setting, and Taxes

If a tax is imposed on a product,the buyer will always bear the entire burden of the tax.

If the price of garlic is represented by equation P = 25 - Q_D,then the corresponding quantity of garlic demanded is represented by the equation

If the quantity of tacos demanded is represented by the equation Q_D = 20 - 0.5P then the corresponding price of tacos is represented by the equation

An efficient tax is

Economists have shown that the burden of a tax is

If the quantity of hearing aids demanded is represented by the equation Q_D = 40 - P then the corresponding price of hearing aids is represented by the equation

Is there a difference between the "true burden" of a tax and who is legally required to pay a tax? Briefly explain.

In the market for gasoline,an increase in the federal excise tax on gasoline would shift the supply curve up.

A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises.

The following equations represent the demand and supply for kumquats. Q_D = 60 - 3P Q_S = -20 + 5P What is the equilibrium price (P) and quantity (Q - in thousands) of kumquats?

"Taxes are what we pay for a civilized society." This statement was made by

If the price of toothpaste is represented by equation P = 40 - .5Q_D,then the corresponding quantity of toothpaste demanded is represented by the equation

For most goods and services,the burden of a tax is on the sellers.

The following equations represent the demand and supply for bird feeders. Q_D = 35 - P Q_S = -5 + 3P What is the equilibrium price (P) and quantity (Q - in thousands) of bird feeders?

Employers withhold several taxes from employees ' paychecks,one of which is FICA.Congress requires employers to pay half of the FICA tax and workers to pay the other half.Does this mean that the burden of the FICA tax falls evenly on employers and employees? Briefly explain.

If buyers were required to pay the federal excise tax on gasoline directly to the government,the demand curve for gasoline would shift up.

The division of the burden of a tax between buyers and sellers in a market is called tax incidence.

Quiz 4: Economic Efficiency, Government Price Setting, and Taxes

If a tax is imposed on a product,the buyer will always bear the entire burden of the tax.

If the price of garlic is represented by equation P = 25 - QD,then the corresponding quantity of garlic demanded is represented by the equation

If the quantity of tacos demanded is represented by the equation QD = 20 - 0.5P then the corresponding price of tacos is represented by the equation

An efficient tax is

Economists have shown that the burden of a tax is

If the quantity of hearing aids demanded is represented by the equation QD = 40 - P then the corresponding price of hearing aids is represented by the equation

Is there a difference between the "true burden" of a tax and who is legally required to pay a tax? Briefly explain.

In the market for gasoline,an increase in the federal excise tax on gasoline would shift the supply curve up.

A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises.

The following equations represent the demand and supply for kumquats. QD = 60 - 3P QS = -20 + 5P What is the equilibrium price (P) and quantity (Q - in thousands) of kumquats?

"Taxes are what we pay for a civilized society." This statement was made by

If the price of toothpaste is represented by equation P = 40 - .5QD,then the corresponding quantity of toothpaste demanded is represented by the equation

For most goods and services,the burden of a tax is on the sellers.

The following equations represent the demand and supply for bird feeders. QD = 35 - P QS = -5 + 3P What is the equilibrium price (P) and quantity (Q - in thousands) of bird feeders?

Employers withhold several taxes from employees ' paychecks,one of which is FICA.Congress requires employers to pay half of the FICA tax and workers to pay the other half.Does this mean that the burden of the FICA tax falls evenly on employers and employees? Briefly explain.

If buyers were required to pay the federal excise tax on gasoline directly to the government,the demand curve for gasoline would shift up.

The division of the burden of a tax between buyers and sellers in a market is called tax incidence.

If the price of garlic is represented by equation P = 25 - Q_D,then the corresponding quantity of garlic demanded is represented by the equation

If the quantity of tacos demanded is represented by the equation Q_D = 20 - 0.5P then the corresponding price of tacos is represented by the equation

If the quantity of hearing aids demanded is represented by the equation Q_D = 40 - P then the corresponding price of hearing aids is represented by the equation

The following equations represent the demand and supply for kumquats. Q_D = 60 - 3P Q_S = -20 + 5P What is the equilibrium price (P) and quantity (Q - in thousands) of kumquats?

If the price of toothpaste is represented by equation P = 40 - .5Q_D,then the corresponding quantity of toothpaste demanded is represented by the equation

The following equations represent the demand and supply for bird feeders. Q_D = 35 - P Q_S = -5 + 3P What is the equilibrium price (P) and quantity (Q - in thousands) of bird feeders?