Question 1

Deadweight loss measures the loss

Accepted Answer

A)   in a market to buyers and sellers that is not offset by an increase in government revenue.
B)   in revenue to the government when buyers choose to buy less of the product because of the tax.
C)   of equality in a market due to government intervention.
D)   of total revenue to business firms due to the price wedge caused by the tax.E) B) and D)
F) B) and C)

Question 2

Concerning the labor market and taxes on labor,economists disagree about

Accepted Answer

A)   the size of the tax on labor.
B)   the size of the deadweight loss of the tax on labor.
C)   whether or not a tax on labor places a wedge between the wage that firms pay and the wage that workers receive.
D)   All of the above are correct.E) B) and D)
F) C) and D)

Question 3

Which of the following statements is correct?

Accepted Answer

A)   A decrease in the size of a tax always decreases the tax revenue raised by that tax.
B)   A decrease in the size of a tax always decreases the deadweight loss of that tax.
C)   Tax revenue decreases when there is a small decrease in the tax rate and the economy is on the downward-sloping part of the Laffer curve.
D)   An increase in the size of a tax leads to an increase in the deadweight loss of the tax only if the economy is on the upward-sloping part of the Laffer curve.E) B) and C)
F) C) and D)

Question 4

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

Accepted Answer

A)   The tax on airline tickets increases from $20 per ticket to $60 per ticket.
B)   The tax on airline tickets increases from $20 per ticket to $90 per ticket.
C)   The tax on airline tickets increases from $15 per ticket to $60 per ticket.
D)   The tax on airline tickets increases from $15 per ticket to $135 per ticket.E) B) and C)
F) All of the above

Question 5

John has been in the habit of mowing Willa's lawn each week for $20.John's opportunity cost is $15,and Willa would be willing to pay $25 to have her lawn mowed.What is the maximum tax the government can impose on lawn mowing without discouraging John and Willa from continuing their mutually beneficial arrangement?

Accepted Answer

If the tax is less than $10,there will e...

Question 6

Figure 8-1
 
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The producer surplus before the tax is measured by the area

Accepted Answer

A)   I+J+K.
B)   I+Y.
C)   L+M+Y.
D)   M.E) A) and B)
F) None of the above

Question 7

When the government imposes taxes on buyers and sellers of a good,society loses some of the benefits of market efficiency.

Accepted Answer

A) True 
 B)False

Question 8

Economists dismiss the idea that lower tax rates can lead to higher tax revenue,because there is a consensus that the relevant elasticities of demand and supply are very low.

Accepted Answer

A) True 
 B)False

Question 9

Taxes on labor tend to encourage the elderly to retire early.

Accepted Answer

A) True 
 B)False

Question 10

Figure 8-9
The vertical distance between points A and C represent a tax in the market.
 
-Refer to Figure 8-9.The per-unit burden of the tax on buyers is

Accepted Answer

A)   $20.
B)   $200.
C)   $300.
D)   $500.E) B) and C)
F) B) and D)

Question 11

The benefit to sellers of participating in a market is measured by the

Accepted Answer

A)   amount of taxes collected on sales of the good.
B)   producer surplus.
C)   amount sellers receive for their product.
D)   sellers' willingness to sell.E) None of the above
F) B) and C)

Question 12

Figure 8-7
The vertical distance between points A and B represents a tax in the market.
 
-Refer to Figure 8-7.As a result of the tax,

Accepted Answer

A)   consumer surplus decreases from $150 to $60.
B)   producer surplus decreases from $125 to $45.
C)   the market experiences a deadweight loss of $45.
D)   All of the above are correct.E) B) and D)
F) B) and C)

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

Question 14

Suppose Ashley needs a dog sitter so that she can travel to her sister's wedding.Ashley values dog sitting for the weekend at $200.Cami is willing to dog sit for Ashley so long as she receives at least $175.Ashley and Cami agree on a price of $185.Suppose the government imposes a tax of $30 on dog sitting.What is the deadweight loss of the tax?

Accepted Answer

A)   the maximum value that Ashley would pay for dog sitting
B)   the $30 tax
C)   the lost benefit to Ashley and Cami because after the tax, Cami will not dog sit for Ashley
D)   the lost benefit to Ashley of being unable to hire a dog sitter because Ashley is the one who would pay the taxE) A) and B)
F) B) and D)

Question 15

Suppose the tax on gasoline is raised from $0.50 per gallon to $2.50 per gallon.As a result,

Accepted Answer

A)   tax revenue necessarily increases.
B)   the deadweight loss of the tax necessarily increases.
C)   the demand curve for gasoline necessarily becomes steeper.
D)   All of the above are correct.E) A) and C)
F) None of the above

Question 16

For good X,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.A tax of $15 per unit is imposed on good X.The tax reduces the equilibrium quantity in the market by 300 units.The deadweight loss from the tax is

Accepted Answer

A)   $1,750.
B)   $2,250.
C)   $3,000.
D)   $4,500.E) A) and B)
F) A) and C)

Question 17

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.With the tax,the producer surplus is

Accepted Answer

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

Question 18

Tax revenues increase in direct proportion to increases in the size of the tax.

Accepted Answer

A) True 
 B)False

Question 19

Total surplus with a tax is equal to

Accepted Answer

A)   consumer surplus plus producer surplus.
B)   consumer surplus minus producer surplus.
C)   consumer surplus plus producer surplus minus tax revenue.
D)   consumer surplus plus producer surplus plus tax revenue.E) A) and C)
F) C) and D)

Question 20

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

Accepted Answer

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

Exam 8: Application: The Costs of Taxation.

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

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

For good X,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.A tax of $15 per unit is imposed on good X.The tax reduces the equilibrium quantity in the market by 300 units.The deadweight loss from the tax is

Correct Answer
verified

Economists dismiss the idea that lower tax rates can lead to higher tax revenue,because there is a consensus that the relevant elasticities of demand and supply are very low.

Correct Answer
verified

Correct Answer
verified

The benefit to sellers of participating in a market is measured by the

Correct Answer
verified

When the government imposes taxes on buyers and sellers of a good,society loses some of the benefits of market efficiency.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Suppose the tax on gasoline is raised from $0.50 per gallon to $2.50 per gallon.As a result,

Correct Answer
verified

Correct Answer
verified
If the tax is less than $10,there will e...
View Answer

Concerning the labor market and taxes on labor,economists disagree about

Correct Answer
verified

Total surplus with a tax is equal to

Correct Answer
verified

Tax revenues increase in direct proportion to increases in the size of the tax.

Correct Answer
verified

Figure 8-7 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-7.As a result of the tax,

Correct Answer
verified

Figure 8-1 -Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The producer surplus before the tax is measured by the area

Correct Answer
verified

Taxes on labor tend to encourage the elderly to retire early.

Correct Answer
verified

Deadweight loss measures the loss

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 per-unit burden of the tax on buyers is

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.With the tax,the producer surplus is

Correct Answer
verified

Exam 8: Application: The Costs of Taxation.

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For good X,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.A tax of $15 per unit is imposed on good X.The tax reduces the equilibrium quantity in the market by 300 units.The deadweight loss from the tax is

Correct AnswerverifiedShow Answer

Economists dismiss the idea that lower tax rates can lead to higher tax revenue,because there is a consensus that the relevant elasticities of demand and supply are very low.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The benefit to sellers of participating in a market is measured by the

Correct AnswerverifiedShow Answer

When the government imposes taxes on buyers and sellers of a good,society loses some of the benefits of market efficiency.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Suppose the tax on gasoline is raised from $0.50 per gallon to $2.50 per gallon.As a result,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIf the tax is less than $10,there will e...View AnswerShow Answer

Concerning the labor market and taxes on labor,economists disagree about

Correct AnswerverifiedShow Answer

Total surplus with a tax is equal to

Correct AnswerverifiedShow Answer

Tax revenues increase in direct proportion to increases in the size of the tax.

Correct AnswerverifiedShow Answer

Figure 8-7 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-7.As a result of the tax,

Correct AnswerverifiedShow Answer

Figure 8-1 -Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The producer surplus before the tax is measured by the area

Correct AnswerverifiedShow Answer

Taxes on labor tend to encourage the elderly to retire early.

Correct AnswerverifiedShow Answer

Deadweight loss measures the loss

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 per-unit burden of the tax on buyers is

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.With the tax,the producer surplus 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
If the tax is less than $10,there will e...
View 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