Question 1

Who once said that taxes are the price we pay for a civilized society?

Accepted Answer

A)  Milton Friedman
B)  Theodore Roosevelt
C)  Arthur Laffer
D)  Oliver Wendell Holmes, Jr.E) None of the above
F) B) and C)

Question 2

Figure 8-10 
-Refer to Figure 8-10. Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2. The deadweight loss of the tax is

Accepted Answer

A)  [1/2 x (P0-P5)  x Q5] + [1/2 x (P5-0)  x Q5].
B)  [1/2 x (P0-P2)  x Q2] +[(P2-P8)  x Q2] + [1/2 x (P8-0)  x Q2].
C)  (P2-P8)  x Q2.
D)  1/2 x (P2-P8)  x (Q5-Q2) .E) None of the above
F) A) and C)

Question 3

Figure 8-25 
-Refer to Figure 8-25. How much is total surplus at the market equilibrium?

Accepted Answer

Total surp...

Question 4

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

Accepted Answer

A)  ABC.
B)  P1P3ABC.
C)  P1P2BC.
D)  P1C0.E) A) and B)
F) A) and C)

Question 5

Taxes on labor encourage which of the following?

Accepted Answer

A)  labor demand to be more inelastic
B)  mothers to stay at home rather than work in the labor force
C)  workers to work overtime
D)  fathers to take on second jobsE) C) and D)
F) None of the above

Question 6

Taxes on labor tend to encourage the elderly to retire early.

Accepted Answer

A) True 
 B)False

Question 7

Figure 8-7
The vertical distance between points A and B represents a tax in the market. th 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." class="answers-bank-image d-inline" rel="preload" >
-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?

Accepted Answer

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.E) A) and B)
F) None of the above

Question 8

Figure 8-13 
-Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The loss of producer surplus resulting from this tax is

Accepted Answer

A)  $60.
B)  $45.
C)  $30.
D)  $15.E) A) and B)
F) None of the above

Question 9

Figure 8-11 
-Refer to Figure 8-11. Neither a shift of the demand curve nor a shift of the supply curve is shown on the figure. However, we know that, when the tax is imposed,

Accepted Answer

A)  the demand curve will shift.
B)  the supply curve will shift.
C)  either the demand curve or the supply curve will shift.
D)  None of the above are correct; the tax causes neither the demand curve nor the supply curve to shift.E) All of the above
F) A) and D)

Question 10

The benefit that government receives from a tax is measured by

Accepted Answer

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.E) None of the above
F) A) and C)

Question 11

Figure 8-12 
-Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The tax causes the price received by sellers to

Accepted Answer

A)  decrease by $3.
B)  increase by $2.
C)  decrease by $1.
D)  increase by $6.E) C) and D)
F) B) and D)

Question 12

Figure 8-21 
-Refer to Figure 8-21. Suppose the government places a $3 per-unit tax on this good. The smallest deadweight loss from the tax would occur in a market where demand is represented by

Accepted Answer

A)  Demand 1, and supply is represented by Supply 1.
B)  Demand 1, and supply is represented by Supply 2.
C)  Demand 2, and supply is represented by Supply 1.
D)  Demand 2, and supply is represented by Supply 2.E) A) and D)
F) B) and C)

Question 13

The demand for energy drinks is more elastic than the demand for milk. Would a tax on energy drinks or a tax on milk have a larger deadweight loss? Explain.

Accepted Answer

A tax on energy drinks would have a larg...

Question 14

Taxes on labor tend to increase the number of hours that people choose to work.

Accepted Answer

A) True 
 B)False

Question 15

Assume the supply curve for diapers is a typical, upward-sloping straight line, and the demand curve for diapers is a typical, downward-sloping straight line. Suppose the equilibrium quantity in the market for diapers is 1,000 per month when there is no tax. Then a tax of $0.50 per diaper 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?

Accepted Answer

A)  After the tax is imposed, the equilibrium quantity of diapers is 900 per month.
B)  The demand for diapers is more elastic than the supply of diapers.
C)  The deadweight loss of the tax is $12.50.
D)  The tax causes a decrease in consumer surplus of $380.E) A) and B)
F) C) and D)

Question 16

A tax raises the price received by sellers and lowers the price paid by buyers.

Accepted Answer

A) True 
 B)False

Question 17

Figure 8-26 
-Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. What price will sellers receive for the good after the tax is imposed?

Accepted Answer

Sellers will receive...

Question 18

Figure 8-26 
-Refer to Figure 8-26. How much is consumer surplus at the market equilibrium?

Accepted Answer

Consumer surplus is ...

Question 19

Figure 8-13 
-Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The tax causes the price paid by buyers to

Accepted Answer

A)  decrease by $5.
B)  increase by $5.
C)  increase by $3.
D)  increase by $2.E) A) and B)
F) A) and C)

Question 20

Figure 8-14 
-Refer to Figure 8-14. Which of the following statements is not correct?

Accepted Answer

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.E) A) and B)
F) A) and C)

Exam 8: Applications: the Costs of Taxation

Figure 8-26 -Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. What price will sellers receive for the good after the tax is imposed?

Correct Answer
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Sellers will receive...
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The demand for energy drinks is more elastic than the demand for milk. Would a tax on energy drinks or a tax on milk have a larger deadweight loss? Explain.

Correct Answer
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A tax on energy drinks would have a larg...
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Figure 8-13 -Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The loss of producer surplus resulting from this tax is

Correct Answer
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Figure 8-7 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-7. Suppose a 20^th unit of the good were sold by a seller to a buyer. Which of the following statements is correct?

Correct Answer
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Taxes on labor encourage which of the following?

Correct Answer
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Taxes on labor tend to encourage the elderly to retire early.

Correct Answer
verified

A tax raises the price received by sellers and lowers the price paid by buyers.

Correct Answer
verified

Who once said that taxes are the price we pay for a civilized society?

Correct Answer
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Figure 8-13 -Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The tax causes the price paid by buyers to

Correct Answer
verified

Figure 8-21 -Refer to Figure 8-21. Suppose the government places a $3 per-unit tax on this good. The smallest deadweight loss from the tax would occur in a market where demand is represented by

Correct Answer
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Figure 8-14 -Refer to Figure 8-14. Which of the following statements is not correct?

Correct Answer
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Figure 8-26 -Refer to Figure 8-26. How much is consumer surplus at the market equilibrium?

Correct Answer
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Consumer surplus is ...
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Figure 8-11 -Refer to Figure 8-11. Neither a shift of the demand curve nor a shift of the supply curve is shown on the figure. However, we know that, when the tax is imposed,

Correct Answer
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Figure 8-25 -Refer to Figure 8-25. How much is total surplus at the market equilibrium?

Correct Answer
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Total surp...
View Answer

Correct Answer
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Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3. The loss in producer surplus caused by the tax is measured by the area

Correct Answer
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Figure 8-12 -Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The tax causes the price received by sellers to

Correct Answer
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Figure 8-10 -Refer to Figure 8-10. Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2. The deadweight loss of the tax is

Correct Answer
verified

Taxes on labor tend to increase the number of hours that people choose to work.

Correct Answer
verified

The benefit that government receives from a tax is measured by

Correct Answer
verified

Exam 8: Applications: the Costs of Taxation

Figure 8-26 -Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. What price will sellers receive for the good after the tax is imposed?

Correct AnswerverifiedSellers will receive...View AnswerShow Answer

The demand for energy drinks is more elastic than the demand for milk. Would a tax on energy drinks or a tax on milk have a larger deadweight loss? Explain.

Correct AnswerverifiedA tax on energy drinks would have a larg...View AnswerShow Answer

Figure 8-13 -Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The loss of producer surplus resulting from this tax is

Correct AnswerverifiedShow Answer

Figure 8-7 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-7. Suppose a 20th unit of the good were sold by a seller to a buyer. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Taxes on labor encourage which of the following?

Correct AnswerverifiedShow Answer

Taxes on labor tend to encourage the elderly to retire early.

Correct AnswerverifiedShow Answer

A tax raises the price received by sellers and lowers the price paid by buyers.

Correct AnswerverifiedShow Answer

Who once said that taxes are the price we pay for a civilized society?

Correct AnswerverifiedShow Answer

Figure 8-13 -Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The tax causes the price paid by buyers to

Correct AnswerverifiedShow Answer

Figure 8-21 -Refer to Figure 8-21. Suppose the government places a $3 per-unit tax on this good. The smallest deadweight loss from the tax would occur in a market where demand is represented by

Correct AnswerverifiedShow Answer

Figure 8-14 -Refer to Figure 8-14. Which of the following statements is not correct?

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Figure 8-26 -Refer to Figure 8-26. How much is consumer surplus at the market equilibrium?

Correct AnswerverifiedConsumer surplus is ...View AnswerShow Answer

Figure 8-11 -Refer to Figure 8-11. Neither a shift of the demand curve nor a shift of the supply curve is shown on the figure. However, we know that, when the tax is imposed,

Correct AnswerverifiedShow Answer

Figure 8-25 -Refer to Figure 8-25. How much is total surplus at the market equilibrium?

Correct AnswerverifiedTotal surp...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3. The loss in producer surplus caused by the tax is measured by the area

Correct AnswerverifiedShow Answer

Figure 8-12 -Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The tax causes the price received by sellers to

Correct AnswerverifiedShow Answer

Figure 8-10 -Refer to Figure 8-10. Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2. The deadweight loss of the tax is

Correct AnswerverifiedShow Answer

Taxes on labor tend to increase the number of hours that people choose to work.

Correct AnswerverifiedShow Answer

The benefit that government receives from a tax is measured by

Correct AnswerverifiedShow Answer

Correct Answer
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Sellers will receive...
View Answer

Correct Answer
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A tax on energy drinks would have a larg...
View Answer

Correct Answer
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Figure 8-7 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-7. Suppose a 20^th unit of the good were sold by a seller to a buyer. Which of the following statements is correct?

Correct Answer
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Consumer surplus is ...
View Answer

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Total surp...
View Answer

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