Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

In a recent research paper published by the European Central Bank,two economists concluded that U.S.tax revenues would

Accepted Answer

A)   increase if labor taxes were increased or if capital income taxes were increased.
B)   increase if labor taxes were increased, but tax revenues would decrease if capital income taxes were increased.
C)   decrease if labor taxes were increased, but tax revenues would increase if capital income taxes were increased.
D)   decrease if labor taxes were increased or if capital income taxes were increased.

Question 3

Figure 8-12
 
-Refer to Figure 8-12.Which of the following statements is correct?

Accepted Answer

A)   Supply 1 is more elastic than supply 2.
B)   Demand 2 is more elastic than demand 1.
C)   Demand 1 is more elastic than supply 1.
D)   All of the above are correct.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements correctly describes the relationship between the size of the deadweight loss and the amount of tax revenue as the size of a tax increases from a small tax to a medium tax and finally to a large tax?

Accepted Answer

A)   Both the size of the deadweight loss and tax revenue increase.
B)   The size of the deadweight loss increases, but the tax revenue decreases.
C)   The size of the deadweight loss increases, but the tax revenue first increases, then decreases.
D)   Both the size of the deadweight loss and tax revenue decrease.

Question 6

Assume that for good X the supply curve for a good is a typical,upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.If the good is taxed,and the tax is doubled,the

Accepted Answer

A)   base of the triangle that represents the deadweight loss doubles.
B)   height of the triangle that represents the deadweight loss doubles.
C)   deadweight loss of the tax quadruples.
D)   All of the above are correct.

Question 7

As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on,the

Accepted Answer

A)   tax revenue increases at first, but it eventually peaks and then decreases.
B)   deadweight loss increases at first, but it eventually peaks and then decreases.
C)   tax revenue always increases, and the deadweight loss always increases.
D)   tax revenue always decreases, and the deadweight loss always increases.

Question 8

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,the equilibrium price and quantity are

Accepted Answer

A)   $16 and 300.
B)   $10 and 600.
C)   $10 and 300.
D)   $6 and 300.

Question 9

Economists disagree on whether labor taxes have a small or large deadweight loss.

Accepted Answer

A) True 
 B)False

Question 10

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 for those buyers of the good who continue to buy it after the tax is imposed is

Accepted Answer

A)   $0.
B)   $1.50.
C)   $3.
D)   $4.50.

Question 11

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,consumer surplus in this market is

Accepted Answer

A)   $1,500.
B)   $2,400.
C)   $3,000.
D)   $3,600.

Question 12

Supply-side economics is a term associated with the views of

Accepted Answer

A)   Ronald Reagan and Arthur Laffer.
B)   Karl Marx.
C)   Bill Clinton and Greg Mankiw.
D)   Milton Friedman.

Question 13

Assume that for good X the supply curve for a good is a typical,upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.If the good is taxed,and the tax is doubled,the

Accepted Answer

A)   base of the triangle that represents the deadweight loss quadruples.
B)   height of the triangle that represents the deadweight loss doubles.
C)   deadweight loss of the tax doubles.
D)   All of the above are correct.

Question 14

When a tax is levied on a good,

Accepted Answer

A)   neither buyers nor sellers are made worse off.
B)   only sellers are made worse off.
C)   only buyers are made worse off.
D)   both buyers and sellers are made worse off.

Question 15

Figure 8-12
 
-Refer to Figure 8-12.Which of the following combinations will maximize the deadweight loss from a tax?

Accepted Answer

A)   supply 1 and demand 1
B)   supply 2 and demand 2
C)   supply 1 and demand 2
D)   supply 2 and demand 1

Question 16

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

Accepted Answer

A)   I+Y.
B)   J+K+L+M.
C)   I+Y+B.
D)   I+J+K+L+M+Y.

Question 17

Figure 8-2
The vertical distance between points A and B represents a tax in the market.
 
-Refer to Figure 8-2.The amount of tax revenue received by the government is

Accepted Answer

A)   $2.50.
B)   $4.
C)   $5.
D)   $9.

Question 18

In the market for widgets,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.The equilibrium quantity in the market for widgets is 250 per month when there is no tax.Then a tax of $6 per widget is imposed.As a result,the government is able to raise $750 per month in tax revenue.We can conclude that the after-tax quantity of widgets is

Accepted Answer

A)   75 per month.
B)   100 per month.
C)   125 per month.
D)   150 per month.

Question 19

The Laffer curve illustrates that

Accepted Answer

A)   deadweight loss rises by the square of the increase in a tax.
B)   deadweight loss rises exponentially as a tax increases.
C)   tax revenue first rises, then falls as a tax increases.
D)   Both a)  and b)  are correct.

Question 20

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 deadweight loss associated with the tax is equal to

Accepted Answer

A)   P3ACP1.
B)   ABC.
C)   P2ADP3.
D)   P1DCP2.

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 amount of tax revenue received by the government is

Correct Answer
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Assume that for good X the supply curve for a good is a typical,upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.If the good is taxed,and the tax is doubled,the

Correct Answer
verified

As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on,the

Correct Answer
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The Laffer curve illustrates that

Correct Answer
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Correct Answer
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When a tax is levied on a good,

Correct Answer
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Figure 8-12 -Refer to Figure 8-12.Which of the following combinations will maximize the deadweight loss from a tax?

Correct Answer
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In a recent research paper published by the European Central Bank,two economists concluded that U.S.tax revenues would

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.Without a tax,the equilibrium price and quantity are

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 consumer surplus for those buyers of the good who continue to buy it after the tax is imposed is

Correct Answer
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Figure 8-12 -Refer to Figure 8-12.Which of the following statements is correct?

Correct Answer
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Figure 8-1 -Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.Total surplus after the tax is measured by the area

Correct Answer
verified

Assume that for good X the supply curve for a good is a typical,upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.If the good is taxed,and the tax is doubled,the

Correct Answer
verified

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 deadweight loss associated with the tax is equal to

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements correctly describes the relationship between the size of the deadweight loss and the amount of tax revenue as the size of a tax increases from a small tax to a medium tax and finally to a large tax?

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.Without a tax,consumer surplus in this market is

Correct Answer
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Supply-side economics is a term associated with the views of

Correct Answer
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Economists disagree on whether labor taxes have a small or large deadweight loss.

Correct Answer
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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 amount of tax revenue received by the government is

Correct AnswerverifiedShow Answer

Assume that for good X the supply curve for a good is a typical,upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.If the good is taxed,and the tax is doubled,the

Correct AnswerverifiedShow Answer

As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on,the

Correct AnswerverifiedShow Answer

The Laffer curve illustrates that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a tax is levied on a good,

Correct AnswerverifiedShow Answer

Figure 8-12 -Refer to Figure 8-12.Which of the following combinations will maximize the deadweight loss from a tax?

Correct AnswerverifiedShow Answer

In a recent research paper published by the European Central Bank,two economists concluded that U.S.tax revenues would

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,the equilibrium price and quantity are

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 for those buyers of the good who continue to buy it after the tax is imposed is

Correct AnswerverifiedShow Answer

Figure 8-12 -Refer to Figure 8-12.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume that for good X the supply curve for a good is a typical,upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.If the good is taxed,and the tax is doubled,the

Correct AnswerverifiedShow Answer

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 deadweight loss associated with the tax is equal to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements correctly describes the relationship between the size of the deadweight loss and the amount of tax revenue as the size of a tax increases from a small tax to a medium tax and finally to a large tax?

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,consumer surplus in this market is

Correct AnswerverifiedShow Answer

Supply-side economics is a term associated with the views of

Correct AnswerverifiedShow Answer

Economists disagree on whether labor taxes have a small or large deadweight loss.

Correct AnswerverifiedShow Answer

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