Question 1

In 1776, the American Revolution was sparked by anger over

Accepted Answer

A)   the extravagant lifestyle of British royalty.
B)   the crimes of British soldiers stationed in the American colonies.
C)   British taxes imposed on the American colonies.
D)   the failure of the British to protect American colonists from attack by hostile Native Americans.E) A) and B)
F) A) and C)

Question 2

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. The deadweight loss of the tax is

Accepted Answer

A)   [1/2 x (P0-P5)  x Q5] + [1/2 x (P5-0)  x Q5].
B)   [1/2 x (P0-P2)  x Q2] +[(P2-P8)  x Q2] + [1/2 x (P8-0)  x Q2].
C)   (P2-P8)  x Q2.
D)   1/2 x (P2-P8)  x (Q5-Q2) .E) B) and C)
F) A) and D)

Question 3

Scenario 8-3
Suppose the market demand and market supply curves are given by the equations: 
-Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes:  If T = 40, how much tax revenue will be collected from this tax?

Accepted Answer

Tax revenu...

Question 4

Consider a good to which a per-unit tax applies. The greater the price elasticities of demand and supply for the good, the

Accepted Answer

A)   smaller the deadweight loss from the tax.
B)   greater the deadweight loss from the tax.
C)   more efficient is the tax.
D)   more equitable is the distribution of the tax burden between buyers and sellers.E) B) and C)
F) B) and D)

Question 5

Figure 8-5
Suppose that the government imposes a tax of P3 - P1. 
-Refer to Figure 8-5. The total surplus with the tax is represented by area

Accepted Answer

A)   C+H.
B)   A+B+C.
C)   D+H+F.
D)   A+B+D+F.E) A) and D)
F) None of the above

Question 6

Figure 8-7
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-7. Which of the following statements is correct?

Accepted Answer

A)   Total surplus before the tax is imposed is $500.
B)   After the tax is imposed, consumer surplus is 45 percent of its pre-tax value.
C)   After the tax is imposed, producer surplus is 45 percent of its pre-tax value.
D)   All of the above are correct.E) A) and C)
F) All of the above

Question 7

Which of the following statements is correct regarding a tax on a good and the resulting deadweight loss?

Accepted Answer

A)   The greater are the price elasticities of supply and demand, the greater is the deadweight loss.
B)   The greater is the price elasticity of supply and the smaller is the price elasticity of demand, the greater is the deadweight loss.
C)   The smaller are the decreases in quantity demanded and quantity supplied, the greater the deadweight loss.
D)   The smaller is the wedge between the effective price to sellers and the effective price to buyers, the greater is the deadweight loss.E) A) and D)
F) A) and C)

Question 8

Which of the following ideas is the most plausible?

Accepted Answer

A)   Tax revenue is more likely to increase when a low tax rate is increased than when a high tax rate is increased.
B)   Tax revenue is less likely to increase when a low tax rate is increased than when a high tax rate is increased.
C)   Tax revenue is likely to increase by the same amount when a low tax rate is increased and when a high tax rate is increased.
D)   Decreasing a tax rate can never increase tax revenue.E) None of the above
F) A) and C)

Question 9

When a tax is imposed on a good, the resulting decrease in consumer surplus is always larger than the resulting decrease in producer surplus.

Accepted Answer

A) True 
 B)False

Question 10

Suppose a tax of $5 per unit is imposed on a good. The supply curve is a typical upward-sloping straight line, and the demand curve is a typical downward-sloping straight line. The tax decreases consumer surplus by $10,000 and decreases producer surplus by $15,000. The deadweight loss of the tax is $2,500. The tax decreased the equilibrium quantity of the good from

Accepted Answer

A)   6,500 to 5,500.
B)   5,500 to 4,500.
C)   5,000 to 3,000.
D)   6,000 to 4,000.E) B) and C)
F) A) and D)

Question 11

A tax levied on the sellers 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 upward (or to the right) .
D)   demand curve downward (or to the left) .E) All of the above
F) A) and D)

Question 12

The idea that tax cuts would increase the quantity of labor supplied, thus increasing tax revenue, became known as supply-side economics.

Accepted Answer

A) True 
 B)False

Question 13

A tax on a good causes the size of the market to shrink.

Accepted Answer

A) True 
 B)False

Exam 8: Application: the Costs of Taxation

Scenario 8-3 Suppose the market demand and market supply curves are given by the equations: -Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes: If T = 40, how much tax revenue will be collected from this tax?

Correct Answer
verified
Tax revenu...
View Answer

Correct Answer
verified

When a tax is imposed on a good, the resulting decrease in consumer surplus is always larger than the resulting decrease in producer surplus.

Correct Answer
verified

In 1776, the American Revolution was sparked by anger over

Correct Answer
verified

Consider a good to which a per-unit tax applies. The greater the price elasticities of demand and supply for the good, the

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. Which of the following statements is correct?

Correct Answer
verified

Which of the following statements is correct regarding a tax on a good and the resulting deadweight loss?

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. The deadweight loss of the tax is

Correct Answer
verified

A tax levied on the sellers of a good shifts the

Correct Answer
verified

Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5. The total surplus with the tax is represented by area

Correct Answer
verified

The idea that tax cuts would increase the quantity of labor supplied, thus increasing tax revenue, became known as supply-side economics.

Correct Answer
verified

Which of the following ideas is the most plausible?

Correct Answer
verified

A tax on a good causes the size of the market to shrink.

Correct Answer
verified

Exam 8: Application: the Costs of Taxation

Scenario 8-3 Suppose the market demand and market supply curves are given by the equations: -Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes: If T = 40, how much tax revenue will be collected from this tax?

Correct AnswerverifiedTax revenu...View AnswerShow Answer

Correct AnswerverifiedShow Answer

When a tax is imposed on a good, the resulting decrease in consumer surplus is always larger than the resulting decrease in producer surplus.

Correct AnswerverifiedShow Answer

In 1776, the American Revolution was sparked by anger over

Correct AnswerverifiedShow Answer

Consider a good to which a per-unit tax applies. The greater the price elasticities of demand and supply for the good, the

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. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following statements is correct regarding a tax on a good and the resulting deadweight loss?

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. The deadweight loss of the tax is

Correct AnswerverifiedShow Answer

A tax levied on the sellers of a good shifts the

Correct AnswerverifiedShow Answer

Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5. The total surplus with the tax is represented by area

Correct AnswerverifiedShow Answer

The idea that tax cuts would increase the quantity of labor supplied, thus increasing tax revenue, became known as supply-side economics.

Correct AnswerverifiedShow Answer

Which of the following ideas is the most plausible?

Correct AnswerverifiedShow Answer

A tax on a good causes the size of the market to shrink.

Correct AnswerverifiedShow Answer

Correct Answer
verified
Tax revenu...
View Answer

Correct Answer
verified

Correct Answer
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