Question 1

The demand for beer is more elastic than the demand for milk,so a tax on beer would have a smaller deadweight loss than an equivalent tax on milk,all else equal.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)   M.
B)   L+M+N+Y+B.
C)   L+M+Y.
D)   J.E) All of the above
F) C) and D)

Question 3

Figure 8-9
The vertical distance between points A and C represent a tax in the market. 
-Refer to Figure 8-9.The loss of producer surplus as a result of the tax is

Accepted Answer

A)   $3,000.
B)   $6,000.
C)   $9,000.
D)   $12,000.E) A) and B)
F) B) and D)

Question 4

Scenario 8-1
Erin would be willing to pay as much as $100 per week to have her house cleaned.Ernesto's opportunity cost of cleaning Erin's house is $70 per week.
-Refer to Scenario 8-1.Assume Erin is required to pay a tax of $15 when she hires someone to clean her house.Which of the following is true?

Accepted Answer

A)   Erin will continue to hire Ernesto to clean her house,but her consumer surplus will decline.
B)   Ernesto will continue to clean Erin's house,and his producer surplus will increase.
C)   Total economic welfare (consumer surplus plus producer surplus plus tax revenue) will decrease.
D)   All of the above are correct.E) None of the above
F) All of the above

Question 5

The deadweight loss of a tax rises even more rapidly than the size of the tax.

Accepted Answer

A) True 
 B)False

Question 6

As the price elasticities of supply and demand increase,the deadweight loss from a tax increases.

Accepted Answer

A) True 
 B)False

Question 7

A tax places a wedge between the price buyers pay and the price sellers receive.

Accepted Answer

A) True 
 B)False

Question 8

The loss in total surplus resulting from a tax is called

Accepted Answer

A)   a deficit.
B)   economic loss.
C)   deadweight loss.
D)   inefficiency.E) B) and C)
F) All of the above

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

A tax on a good

Accepted Answer

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.E) A) and B)
F) A) and D)

Question 11

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

Accepted Answer

A)   $0.
B)   $1.
C)   $2.
D)   $3.E) B) and C)
F) A) and B)

Question 12

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

Accepted Answer

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

Question 13

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

Accepted Answer

A)   $350.
B)   $490.
C)   $700.
D)   $840.E) A) and B)
F) A) and C)

Question 14

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

Accepted Answer

A)   consumer surplus after the tax.
B)   consumer surplus before the tax.
C)   producer surplus after the tax.
D)   producer surplus before the tax.E) B) and C)
F) A) and D)

Question 15

Figure 8-9
The vertical distance between points A and C represent a tax in the market. 
-Refer to Figure 8-9.The imposition of the tax causes the price received by sellers to

Accepted Answer

A)   increase from $600 to $800.
B)   decrease from $800 to $300.
C)   decrease from $600 to $300.
D)   remain unchanged at $600.E) A) and C)
F) None of the above

Question 16

When the government imposes taxes on buyers and sellers of a good,society loses some of the benefits of market efficiency.

Accepted Answer

A) True 
 B)False

Question 17

A deadweight loss is a consequence of a tax on a good because the tax

Accepted Answer

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.E) B) and D)
F) A) and B)

Question 18

As the size of a tax increases,the government's tax revenue rises,then falls.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)   $1.
B)   $4.
C)   $5.
D)   $9.E) A) and B)
F) B) and D)

Question 20

The amount of deadweight loss from a tax depends upon the

Accepted Answer

A)   price elasticity of demand.
B)   price elasticity of supply.
C)   amount of the tax per unit.
D)   All of the above are correct.E) None of the above
F) All of the above

Exam 8: Application: the Costs of Taxation

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

Correct Answer
verified

The amount of deadweight loss from a tax depends upon the

Correct Answer
verified

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

Correct Answer
verified

A tax places a wedge between the price buyers pay and the price sellers receive.

Correct Answer
verified

The demand for beer is more elastic than the demand for milk,so a tax on beer would have a smaller deadweight loss than an equivalent tax on milk,all else equal.

Correct Answer
verified

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

Correct Answer
verified

Figure 8-9 The vertical distance between points A and C represent a tax in the market. -Refer to Figure 8-9.The loss of producer surplus as a result of the tax is

Correct Answer
verified

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

Correct Answer
verified

A deadweight loss is a consequence of a tax on a good because the tax

Correct Answer
verified

The loss in total surplus resulting from a tax is called

Correct Answer
verified

The deadweight loss of a tax rises even more rapidly than the size of the tax.

Correct Answer
verified

As the size of a tax increases,the government's tax revenue rises,then falls.

Correct Answer
verified

A tax on a good

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

When the government imposes taxes on buyers and sellers of a good,society loses some of the benefits of market efficiency.

Correct Answer
verified

Figure 8-9 The vertical distance between points A and C represent a tax in the market. -Refer to Figure 8-9.The imposition of the tax causes the price received by sellers to

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
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As the price elasticities of supply and demand increase,the deadweight loss from a tax increases.

Correct Answer
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Exam 8: Application: the Costs of Taxation

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

Correct AnswerverifiedShow Answer

The amount of deadweight loss from a tax depends upon the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A tax places a wedge between the price buyers pay and the price sellers receive.

Correct AnswerverifiedShow Answer

The demand for beer is more elastic than the demand for milk,so a tax on beer would have a smaller deadweight loss than an equivalent tax on milk,all else equal.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 8-9 The vertical distance between points A and C represent a tax in the market. -Refer to Figure 8-9.The loss of producer surplus as a result of the tax is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A deadweight loss is a consequence of a tax on a good because the tax

Correct AnswerverifiedShow Answer

The loss in total surplus resulting from a tax is called

Correct AnswerverifiedShow Answer

The deadweight loss of a tax rises even more rapidly than the size of the tax.

Correct AnswerverifiedShow Answer

As the size of a tax increases,the government's tax revenue rises,then falls.

Correct AnswerverifiedShow Answer

A tax on a good

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When the government imposes taxes on buyers and sellers of a good,society loses some of the benefits of market efficiency.

Correct AnswerverifiedShow Answer

Figure 8-9 The vertical distance between points A and C represent a tax in the market. -Refer to Figure 8-9.The imposition of the tax causes the price received by sellers to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

As the price elasticities of supply and demand increase,the deadweight loss from a tax increases.

Correct AnswerverifiedShow Answer

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