Question 1

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

Accepted Answer

A)   T/Q.
B)   T+Q.
C)   TxQ.
D)   (TxQ) /Q.E) A) and B)
F) B) and C)

Question 2

In a recent research paper published by the European Central Bank,two economists concluded that U.S.tax revenues would

Accepted Answer

A)   increase if labor taxes were increased or if capital income taxes were increased.
B)   increase if labor taxes were increased,but tax revenues would decrease if capital income taxes were increased.
C)   decrease if labor taxes were increased,but tax revenues would increase if capital income taxes were increased.
D)   decrease if labor taxes were increased or if capital income taxes were increased.E) C) and D)
F) B) and C)

Question 3

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.

Accepted Answer

A) True 
 B)False

Question 4

Figure 8-17
The vertical distance between points A and B represents the original tax. 
-Refer to Figure 8-17.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

Accepted Answer

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

Question 5

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) B) and D)
F) A) and B)

Question 6

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

Accepted Answer

A)   California economics.
B)   welfare economics.
C)   supply-side economics.
D)   elasticity economics.E) None of the above
F) A) and B)

Question 7

Taxes on labor tend to encourage second earners to stay at home rather than work in the labor force.

Accepted Answer

A) True 
 B)False

Question 8

In which of the following instances would the deadweight loss of the tax on cartons of cigarettes increase by a factor of 9?

Accepted Answer

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

Question 9

A tax

Accepted Answer

A)   lowers the price buyers pay and raises the price sellers receive.
B)   raises the price buyers pay and lowers the price sellers receive.
C)   places a wedge between the price buyers pay and the price sellers receive.
D)   Both b) and c) are correct.E) A) and D)
F) A) and B)

Question 10

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

Accepted Answer

A)   P3 - P1.
B)   P3 - P2.
C)   P2 - P1.
D)   P4 - P3.E) C) and D)
F) A) and B)

Question 11

One result of a tax,regardless of whether the tax is placed on the buyers or the sellers,is that the

Accepted Answer

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.E) All of the above
F) None of the above

Question 12

When a good is taxed,

Accepted Answer

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.E) None of the above
F) All of the above

Question 13

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

Accepted Answer

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

Question 14

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

Accepted Answer

A)   $600.
B)   $900.
C)   $1,500.
D)   $3,000.E) A) and B)
F) A) and C)

Question 15

Supply-side economics is a term associated with the views of

Accepted Answer

A)   Ronald Reagan and Arthur Laffer.
B)   Karl Marx.
C)   Bill Clinton and Greg Mankiw.
D)   Milton Friedman.E) A) and D)
F) B) and C)

Question 16

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

Accepted Answer

A)   P3 - P1.
B)   P3 - P2.
C)   P2 - P1.
D)   P4 - P3.E) B) and C)
F) A) and C)

Question 17

The deadweight loss from a $3 tax will be largest in a market with

Accepted Answer

A)   inelastic supply and elastic demand.
B)   inelastic supply and inelastic demand.
C)   elastic supply and elastic demand.
D)   elastic supply and inelastic demand.E) All of the above
F) A) and C)

Question 18

The more inelastic are demand and supply,the greater is the deadweight loss of a tax.

Accepted Answer

A) True 
 B)False

Question 19

The decrease in total surplus that results from a market distortion,such as a tax,is called a

Accepted Answer

A)   wedge loss.
B)   revenue loss.
C)   deadweight loss.
D)   consumer surplus loss.E) A) and B)
F) B) and C)

Question 20

A tax affects

Accepted Answer

A)   buyers only.
B)   sellers only.
C)   buyers and sellers only.
D)   buyers,sellers,and the government.E) All of the above
F) B) and C)

Exam 8: Application: the Costs of Taxation

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
verified

In a recent research paper published by the European Central Bank,two economists concluded that U.S.tax revenues would

Correct Answer
verified

The more inelastic are demand and supply,the greater is the deadweight loss of a tax.

Correct Answer
verified

The decrease in total surplus that results from a market distortion,such as a tax,is called a

Correct Answer
verified

A tax affects

Correct Answer
verified

In which of the following instances would the deadweight loss of the tax on cartons of cigarettes increase by a factor of 9?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

When a good is taxed,

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 per unit burden of the tax on buyers is

Correct Answer
verified

A tax

Correct Answer
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Correct Answer
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One result of a tax,regardless of whether the tax is placed on the buyers or the sellers,is that the

Correct Answer
verified

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

Correct Answer
verified

The deadweight loss from a $3 tax will be largest in a market with

Correct Answer
verified

Taxes on labor tend to encourage second earners to stay at home rather than work in the labor force.

Correct Answer
verified

Supply-side economics is a term associated with the views of

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 imposition of the tax causes the price received by sellers to

Correct Answer
verified

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.

Correct Answer
verified

Exam 8: Application: the Costs of Taxation

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

In a recent research paper published by the European Central Bank,two economists concluded that U.S.tax revenues would

Correct AnswerverifiedShow Answer

The more inelastic are demand and supply,the greater is the deadweight loss of a tax.

Correct AnswerverifiedShow Answer

The decrease in total surplus that results from a market distortion,such as a tax,is called a

Correct AnswerverifiedShow Answer

A tax affects

Correct AnswerverifiedShow Answer

In which of the following instances would the deadweight loss of the tax on cartons of cigarettes increase by a factor of 9?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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 government imposes the tax in this market,tax revenue is

Correct AnswerverifiedShow Answer

When a good is taxed,

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 per unit burden of the tax on buyers is

Correct AnswerverifiedShow Answer

A tax

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One result of a tax,regardless of whether the tax is placed on the buyers or the sellers,is that the

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 amount of the tax on each unit of the good is

Correct AnswerverifiedShow Answer

The deadweight loss from a $3 tax will be largest in a market with

Correct AnswerverifiedShow Answer

Taxes on labor tend to encourage second earners to stay at home rather than work in the labor force.

Correct AnswerverifiedShow Answer

Supply-side economics is a term associated with the views of

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 imposition of the tax causes the price received by sellers to

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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