Question 1

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.

Question 2

Figure 8-3
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-3.The price that sellers effectively receive after the tax is imposed is

Accepted Answer

A)   P1.
B)   P2.
C)   P3.
D)   P4.

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 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.

Question 4

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 Tom is required to pay a tax of $10 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 still is willing to pay Tom to mow her lawn,but Tom will decline her offer.
C)   Tom still 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.

Question 5

Which of the following statements about a land tax is correct?

Accepted Answer

A)   A tax on raw land causes no deadweight loss.
B)   Landowners bear the entire burden of a tax on raw land.
C)   The government's tax revenue exactly equals the loss of the landowners.
D)   All of the above are correct.

Question 6

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.

Question 7

Figure 8-7
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-7.Before the tax is imposed,the equilibrium price is

Accepted Answer

A)   $16,and the equilibrium quantity is 15.
B)   $12,and the equilibrium quantity is 15.
C)   $12,and the equilibrium quantity is 25.
D)   $8,and the equilibrium quantity is 15.

Question 8

Which of the following statements is correct?

Accepted Answer

A)   In 2008,the combined Social Security-Medicare tax amounted to 15.3 percent of a worker's income.
B)   The White House budget office has asserted that Social Security and Medicare have promised to pay out $18 trillion more in benefits than they will receive in revenue in coming decades.
C)   If payroll taxes are increased to maintain current levels of Social Security and Medicare benefits,an expected result would be fewer hours worked per week by the average American worker.
D)   All of the above are correct.

Question 9

When a tax is imposed on buyers,consumer surplus decreases but producer surplus increases.

Accepted Answer

A) True 
 B)False

Question 10

Total surplus in a market does not change when the government imposes a tax on that market because the loss of consumer surplus and producer surplus is equal to the gain of government revenue.

Accepted Answer

A) True 
 B)False

Question 11

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) .

Question 12

In the early 1980s,which of the following countries had a marginal tax rate of about 80 percent?

Accepted Answer

A)   United States
B)   Canada
C)   Japan
D)   Sweden

Question 13

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

Accepted Answer

A) True 
 B)False

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 tax is imposed in this market,buyers effectively pay what amount of the $10 tax?

Accepted Answer

A)   $0
B)   $4
C)   $6
D)   $10

Question 15

Figure 8-4
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-4.The per-unit burden of the tax on buyers is

Accepted Answer

A)   $14.
B)   $10.
C)   $8.
D)   $6.

Question 16

Figure 8-8
Suppose the government imposes a $10 per unit tax on a good. 
-Refer to Figure 8-8.The decrease in consumer and producer surpluses that is not offset by tax revenue is the area

Accepted Answer

A)   C.
B)   F.
C)   G.
D)   C+F.

Question 17

Which of the following quantities decrease in response to a tax on a good?

Accepted Answer

A)   the equilibrium quantity in the market for the good,the effective price of the good paid by buyers,and consumer surplus
B)   the equilibrium quantity in the market for the good,producer surplus,and the well-being of buyers of the good
C)   the effective price received by sellers of the good,the wedge between the effective price paid by buyers and the effective price received by sellers,and consumer surplus
D)   None of the above is necessarily correct unless we know whether the tax is levied on buyers or on sellers.

Question 18

The graph that represents the amount of deadweight loss (measured on the vertical axis) as a function of the size of the tax (measured on the horizontal axis) looks like

Accepted Answer

A)   a U.
B)   an upside-down U.
C)   a horizontal straight line.
D)   an upward-sloping curve.

Question 19

An increase in the size of a tax is most likely to increase tax revenue in a market with

Accepted Answer

A)   elastic demand and elastic supply.
B)   elastic demand and inelastic supply.
C)   inelastic demand and elastic supply.
D)   inelastic demand and inelastic supply.

Question 20

When a tax is placed on a product,the price paid by buyers

Accepted Answer

A)   rises,and the price received by sellers rises.
B)   rises,and the price received by sellers falls.
C)   falls,and the price received by sellers rises.
D)   falls,and the price received by sellers falls.

Exam 8: Application: The Costs of Taxation

Figure 8-4 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-4.The per-unit burden of the tax on buyers is

Correct Answer
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Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. -Refer to Figure 8-8.The decrease in consumer and producer surpluses that is not offset by tax revenue is the area

Correct Answer
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Total surplus in a market does not change when the government imposes a tax on that market because the loss of consumer surplus and producer surplus is equal to the gain of government revenue.

Correct Answer
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The graph that represents the amount of deadweight loss (measured on the vertical axis) as a function of the size of the tax (measured on the horizontal axis) looks like

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

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.Before the tax is imposed,the equilibrium price is

Correct Answer
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Which of the following quantities decrease in response to a tax on a good?

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 amount of the tax on each unit of the good 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 loss of producer surplus for those sellers of the good who continue to sell it after the tax is imposed is

Correct Answer
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Which of the following statements about a land tax is correct?

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,buyers effectively pay what amount of the $10 tax?

Correct Answer
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In the early 1980s,which of the following countries had a marginal tax rate of about 80 percent?

Correct Answer
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A tax levied on the buyers of a good shifts the

Correct Answer
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An increase in the size of a tax is most likely to increase tax revenue in a market with

Correct Answer
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Which of the following statements is correct?

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 price that sellers effectively receive after the tax is imposed is

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 government imposes the tax in this market,tax revenue is

Correct Answer
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When a tax is placed on a product,the price paid by buyers

Correct Answer
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When a tax is imposed on buyers,consumer surplus decreases but producer surplus increases.

Correct Answer
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Exam 8: Application: The Costs of Taxation

Figure 8-4 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-4.The per-unit burden of the tax on buyers is

Correct AnswerverifiedShow Answer

Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. -Refer to Figure 8-8.The decrease in consumer and producer surpluses that is not offset by tax revenue is the area

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Total surplus in a market does not change when the government imposes a tax on that market because the loss of consumer surplus and producer surplus is equal to the gain of government revenue.

Correct AnswerverifiedShow Answer

The graph that represents the amount of deadweight loss (measured on the vertical axis) as a function of the size of the tax (measured on the horizontal axis) looks like

Correct AnswerverifiedShow Answer

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

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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.Before the tax is imposed,the equilibrium price is

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Which of the following quantities decrease in response to a tax on a good?

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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 amount of the tax on each unit of the good is

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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 loss of producer surplus for those sellers of the good who continue to sell it after the tax is imposed is

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Which of the following statements about a land tax is correct?

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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,buyers effectively pay what amount of the $10 tax?

Correct AnswerverifiedShow Answer

In the early 1980s,which of the following countries had a marginal tax rate of about 80 percent?

Correct AnswerverifiedShow Answer

A tax levied on the buyers of a good shifts the

Correct AnswerverifiedShow Answer

An increase in the size of a tax is most likely to increase tax revenue in a market with

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

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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 price that sellers effectively receive after the tax is imposed is

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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 government imposes the tax in this market,tax revenue is

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When a tax is placed on a product,the price paid by buyers

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When a tax is imposed on buyers,consumer surplus decreases but producer surplus increases.

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