Question 1

Figure 8-19. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax.
 
-Refer to Figure 8-19.According to a recent research paper published by the European Central Bank,which two countries are at a point such as point B if the tax in question is the tax on capital income?

Accepted Answer

A)   the U.S. and the U.K.
B)   France and Germany
C)   Italy and Spain
D)   Denmark and SwedenE) A) and B)
F) C) and D)

Question 2

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 3

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?

Accepted Answer

A)   market B only
B)   markets A and C only
C)   markets B and D only
D)   market D onlyE) A) and D)
F) None of the above

Question 4

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

Accepted Answer

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

Question 5

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

Accepted Answer

A)   $450.
B)   $600.
C)   $900.
D)   $1,500.E) A) and B)
F) A) and C)

Question 6

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

Accepted Answer

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.E) C) and D)
F) All of the above

Question 7

The size of the deadweight loss generated from a tax is affected by the

Accepted Answer

A)   elasticities of both supply and demand.
B)   elasticity of demand only.
C)   elasticity of supply only.
D)   total revenue collected by the government.E) B) and C)
F) B) and D)

Question 8

When a tax is placed on the buyers of a product,a result is that buyers effectively pay

Accepted Answer

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

Question 9

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

Accepted Answer

A)   $2.
B)   $3.
C)   $4.
D)   $5.E) B) and C)
F) A) and B)

Question 10

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) None of the above
F) B) and D)

Question 11

Figure 8-9
The vertical distance between points A and C represent a tax in the market.
 
-Refer to Figure 8-9.The consumer surplus with the tax is

Accepted Answer

A)   $2,000.
B)   $4,000.
C)   $6,000.
D)   $8,000.E) A) and B)
F) B) and D)

Question 12

Taxes cause deadweight losses because they

Accepted Answer

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

Question 13

Figure 8-10
 
-Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.Without the tax,the total surplus is

Accepted Answer

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

Question 14

Taxes drive a wedge into the market by raising the price that sellers receive and lowering the price that buyers pay.

Accepted Answer

A) True 
 B)False

Question 15

A tax levied on the buyers of a good shifts the

Accepted Answer

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

Question 16

A tax on a good

Accepted Answer

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

Question 17

The deadweight loss from a tax

Accepted Answer

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

Question 18

The optimal tax is difficult to determine because although revenues rise and fall as the size of the tax increases,deadweight loss continues to increase.

Accepted Answer

A) True 
 B)False

Question 19

The size of a tax and the deadweight loss that results from the tax are

Accepted Answer

A)   positively related.
B)   negatively related.
C)   independent of each other.
D)   equal to each other.E) A) and B)
F) None of the above

Question 20

When a tax is levied on the sellers of a good,the

Accepted Answer

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

Exam 8: Application: The Costs of Taxation.

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

Correct Answer
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Taxes drive a wedge into the market by raising the price that sellers receive and lowering the price that buyers pay.

Correct Answer
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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?

Correct Answer
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The optimal tax is difficult to determine because although revenues rise and fall as the size of the tax increases,deadweight loss continues to increase.

Correct Answer
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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

Correct Answer
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The deadweight loss from a tax

Correct Answer
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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

Correct Answer
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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
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Taxes cause deadweight losses because they

Correct Answer
verified

When a tax is placed on the buyers of a product,a result is that buyers effectively pay

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 consumer surplus with the tax is

Correct Answer
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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

Correct Answer
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A tax on a good

Correct Answer
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When a tax is levied on the sellers of a good,the

Correct Answer
verified

A tax levied on the buyers of a good shifts the

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 8-10 -Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.Without the tax,the total surplus is

Correct Answer
verified

The size of the deadweight loss generated from a tax is affected by the

Correct Answer
verified

The size of a tax and the deadweight loss that results from the tax are

Correct Answer
verified

Exam 8: Application: The Costs of Taxation.

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

Correct AnswerverifiedShow Answer

Taxes drive a wedge into the market by raising the price that sellers receive and lowering the price that buyers pay.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

The optimal tax is difficult to determine because although revenues rise and fall as the size of the tax increases,deadweight loss continues to increase.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The deadweight loss from a tax

Correct AnswerverifiedShow Answer

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.Producer surplus without 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

Taxes cause deadweight losses because they

Correct AnswerverifiedShow Answer

When a tax is placed on the buyers of a product,a result is that buyers effectively pay

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 consumer surplus with 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 per-unit burden of the tax on sellers is

Correct AnswerverifiedShow Answer

A tax on a good

Correct AnswerverifiedShow Answer

When a tax is levied on the sellers of a good,the

Correct AnswerverifiedShow Answer

A tax levied on the buyers of a good shifts the

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 8-10 -Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.Without the tax,the total surplus is

Correct AnswerverifiedShow Answer

The size of the deadweight loss generated from a tax is affected by the

Correct AnswerverifiedShow Answer

The size of a tax and the deadweight loss that results from the tax are

Correct AnswerverifiedShow Answer

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