Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The less freedom young mothers have to work outside the home, the

Accepted Answer

A)  more elastic the supply of labor will be.
B)  less elastic the supply of labor will be.
C)  more horizontal the labor supply curve will be.
D)  larger is the decrease in employment that will result from a tax on labor.E) None of the above
F) A) and C)

Question 3

If the size of a tax doubles, the deadweight loss doubles.

Accepted Answer

A) True 
 B)False

Question 4

Figure 8-21 
-Refer to Figure 8-21. Suppose the market is represented by Demand 1 and Supply 1. At first the government places a $3 per-unit tax on this good. Then the government decides to raise the tax to $6 per unit. How would you characterize the decision to raise the tax rate from $3 to $6 per unit? The decision is

Accepted Answer

A)  a good one because it increases tax revenue while decreasing the deadweight loss from the tax.
B)  a bad one because it does not increase tax revenue yet increases the deadweight loss from the tax.
C)  a bad one because it decreases tax revenue while increasing the deadweight loss from the tax.
D)  unclear because it increases tax revenue yet also increases the deadweight loss from the tax.E) None of the above
F) C) and D)

Question 5

Assume the price of gasoline is $2.40 per gallon, and the equilibrium quantity of gasoline is 12 million gallons per day with no tax on gasoline. Starting from this initial situation, which of the following scenarios would result in the largest deadweight loss?

Accepted Answer

A)  A 10 percent increase in the price of gasoline reduces the quantity of gasoline demanded by 2 percent and it increases the quantity of gasoline supplied by 5 percent; and the tax on gasoline amounts to $0.40 per gallon.
B)  A 10 percent increase in the price of gasoline reduces the quantity of gasoline demanded by 2 percent and it increases the quantity of gasoline supplied by 7 percent; and the tax on gasoline amounts to $0.40 per gallon.
C)  A 10 percent increase in the price of gasoline reduces the quantity of gasoline demanded by 1 percent and it increases the quantity of gasoline supplied by 8 percent; and the tax on gasoline amounts to $0.35 per gallon.
D)  There is insufficient information to make this determination.E) None of the above
F) B) and C)

Question 6

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) All of the above
F) A) and C)

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) All of the above
F) B) and C)

Exam 8: Application: The Costs of Taxation

If the size of a tax doubles, the deadweight loss doubles.

Correct Answer
verified

The less freedom young mothers have to work outside the home, the

Correct Answer
verified

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

Correct Answer
verified

Assume the price of gasoline is $2.40 per gallon, and the equilibrium quantity of gasoline is 12 million gallons per day with no tax on gasoline. Starting from this initial situation, which of the following scenarios would result in the largest deadweight loss?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Exam 8: Application: The Costs of Taxation

If the size of a tax doubles, the deadweight loss doubles.

Correct AnswerverifiedShow Answer

The less freedom young mothers have to work outside the home, the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume the price of gasoline is $2.40 per gallon, and the equilibrium quantity of gasoline is 12 million gallons per day with no tax on gasoline. Starting from this initial situation, which of the following scenarios would result in the largest deadweight loss?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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