Question 1

Suppose a tax of $0.10 per unit on a good creates a deadweight loss of $100.If the tax is increased to $0.30 per unit,the deadweight loss from the new tax would be

Accepted Answer

A)   $200.
B)   $300.
C)   $900.
D)   $9,000.E) None of the above
F) A) and C)

Question 2

Labor taxes may distort labor markets greatly if

Accepted Answer

A)   labor supply is highly inelastic.
B)   many workers choose to work 40 hours per week regardless of their earnings.
C)   the number of hours many part-time workers want to work is very sensitive to the wage rate.
D)   "underground" workers do not respond to changes in the wages of legal jobs because they prefer not to pay taxes.E) A) and D)
F) A) and C)

Question 3

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 consumer surplus associated with some buyers dropping out of the market as a result of the tax is

Accepted Answer

A)   $0.
B)   $1.50.
C)   $3.
D)   $4.50.E) None of the above
F) A) and B)

Question 4

Figure 8-5
Suppose that the government imposes a tax of P3 - P1. 
-Refer to Figure 8-5.The price that buyers effectively pay after the tax is imposed is

Accepted Answer

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

Question 5

David walks Carolyn's dog once a day for $50 per week.Carolyn values this service at $60 per week,while the opportunity cost of David's time is $30 per week.The government places a tax of $35 per week on dog walkers.After the tax,what is the total surplus?

Accepted Answer

A)   $50
B)   $30
C)   $25
D)   $0E) B) and C)
F) A) and B)

Question 6

Total surplus is always equal to the sum of consumer surplus and producer surplus.

Accepted Answer

A) True 
 B)False

Question 7

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 buyers is

Accepted Answer

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

Question 8

The demand for milk is more elastic than the demand for water.Suppose the government levies an equivalent tax on milk and water.The deadweight loss would be larger in the market for

Accepted Answer

A)   milk than water because the quantity of milk would fall by more than the quantity of water.
B)   milk than water because the quantity of water would fall by more than the quantity of milk.
C)   water than milk because the quantity of milk would fall by more than the quantity of water.
D)   water than milk because the quantity of water would fall by more than the quantity of milk.E) A) and C)
F) A) and B)

Question 9

Using demand and supply diagrams,show the difference in deadweight loss between (a)a market with inelastic demand and supply and (b)a market with elastic demand and supply.

Accepted Answer

The answer of Using demand and supply diagrams,show the difference...

Question 10

Assume the supply curve for cigars is a typical,upward-sloping straight line,and the demand curve for cigars is a typical,downward-sloping straight line.Suppose the equilibrium quantity in the market for cigars is 1,000 per month when there is no tax.Then a tax of $0.50 per cigar 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)   The demand for cigars is less elastic than the supply of cigars.
B)   The tax causes a decrease in consumer surplus of $390 and a decrease in producer surplus of $97.50.
C)   The deadweight loss of the tax is $12.50.
D)   All of the above are correct.E) B) and D)
F) A) and C)

Question 11

For good B,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.When good B is taxed,the area on the relevant supply-and-demand graph that represents

Accepted Answer

A)   government's tax revenue is a rectangle.
B)   the deadweight loss of the tax is a triangle.
C)   the loss of consumer surplus caused by the tax is neither a rectangle nor a triangle.
D)   All of the above are correct.E) B) and C)
F) C) and D)

Question 12

Figure 8-6
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-6.Without a tax,total surplus in this market is

Accepted Answer

A)   $3,000.
B)   $4,800.
C)   $6,000.
D)   $7,200.E) All of the above
F) None of the above

Question 13

Scenario 8-2
Tom mows Stephanie's lawn for $25.Tom's opportunity cost of mowing Stephanie's lawn is $20,and Stephanie's willingness to pay Tom to mow her lawn is $28.
-Refer to Scenario 8-2.Assume that Tom is required to pay a tax of $3 each time he mows a lawn.Which of the following results is most likely?

Accepted Answer

A)   Stephanie now will decide to mow her own lawn,and Tom will decide it is no longer in his interest to mow Stephanie's lawn.
B)   Stephanie is willing to pay Tom to mow her lawn,but Tom will decline her offer.
C)   Tom is willing to mow Stephanie's lawn,but Stephanie will decide to mow her own lawn.
D)   Tom and Stephanie still can engage in a mutually-agreeable trade.E) B) and D)
F) A) and C)

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 per-unit burden of the tax on buyers is

Correct Answer
verified

Correct Answer
verified

Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.The price that buyers effectively pay after the tax is imposed is

Correct Answer
verified

Correct Answer
verified

David walks Carolyn's dog once a day for $50 per week.Carolyn values this service at $60 per week,while the opportunity cost of David's time is $30 per week.The government places a tax of $35 per week on dog walkers.After the tax,what is the total surplus?

Correct Answer
verified

Suppose a tax of $0.10 per unit on a good creates a deadweight loss of $100.If the tax is increased to $0.30 per unit,the deadweight loss from the new tax would be

Correct Answer
verified

Using demand and supply diagrams,show the difference in deadweight loss between (a)a market with inelastic demand and supply and (b)a market with elastic demand and supply.

Correct Answer
verified

Total surplus is always equal to the sum of consumer surplus and producer surplus.

Correct Answer
verified

For good B,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.When good B is taxed,the area on the relevant supply-and-demand graph that represents

Correct Answer
verified

Labor taxes may distort labor markets greatly if

Correct Answer
verified

The demand for milk is more elastic than the demand for water.Suppose the government levies an equivalent tax on milk and water.The deadweight loss would be larger in the market for

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 loss of consumer surplus associated with some buyers dropping out of the market as a result of the tax is

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.Without a tax,total surplus in this market is

Correct Answer
verified

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 per-unit burden of the tax on buyers is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.The price that buyers effectively pay after the tax is imposed is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

David walks Carolyn's dog once a day for $50 per week.Carolyn values this service at $60 per week,while the opportunity cost of David's time is $30 per week.The government places a tax of $35 per week on dog walkers.After the tax,what is the total surplus?

Correct AnswerverifiedShow Answer

Suppose a tax of $0.10 per unit on a good creates a deadweight loss of $100.If the tax is increased to $0.30 per unit,the deadweight loss from the new tax would be

Correct AnswerverifiedShow Answer

Using demand and supply diagrams,show the difference in deadweight loss between (a)a market with inelastic demand and supply and (b)a market with elastic demand and supply.

Correct AnswerverifiedShow Answer

Total surplus is always equal to the sum of consumer surplus and producer surplus.

Correct AnswerverifiedShow Answer

For good B,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.When good B is taxed,the area on the relevant supply-and-demand graph that represents

Correct AnswerverifiedShow Answer

Labor taxes may distort labor markets greatly if

Correct AnswerverifiedShow Answer

The demand for milk is more elastic than the demand for water.Suppose the government levies an equivalent tax on milk and water.The deadweight loss would be larger in the market for

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 loss of consumer surplus associated with some buyers dropping out of the market as a result of the tax is

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.Without a tax,total surplus in this market is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified