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Exam 8: Application: The Costs of Taxation

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Question 171

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Taxes are of interest to

A) microeconomists because they consider how to balance equality and efficiency.
B) microeconomists because they consider how best to design a tax system.
C) macroeconomists because they consider how policymakers can use the tax system to stabilize economic activity.
D) All of the above are correct.

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Question 172

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If the tax on a good is increased from $0.10 per unit to $0.40 per unit,the deadweight loss from the tax

A) remains constant.
B) increases by a factor of 4.
C) increases by a factor of 9.
D) increases by a factor of 16.

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Question 173

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Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.The tax causes a reduction in consumer surplus that is represented by area

The benefit to buyers of participating in a market is measured by

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

When a tax is imposed on the buyers of a good,the demand curve shifts

Illustrate on three demand-and-supply graphs how the size of a tax (small,medium and large)can alter total revenue and deadweight loss.

The decrease in total surplus that results from a market distortion,such as a tax,is called a

Which of the following events is consistent with an increase in the deadweight loss of the gasoline tax from $30 million to $120 million?

To measure the gains and losses from a tax on a good,economists use the tools of

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 sellers is

Which of the following countries has the highest tax rate?

When a tax is imposed,the loss of consumer surplus and producer surplus as a result of the tax exceeds the tax revenue collected by the government.

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.If Stephanie hires Tom to mow her lawn,Stephanie's consumer surplus is

For good A,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.When good A is taxed,the area on the relevant supply-and-demand graph that represents the deadweight loss is

Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.The benefit to the government is measured by

Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. -Refer to Figure 8-8.The tax causes producer surplus to decrease by the area

Suppose a tax of $0.50 per unit on a good creates a deadweight loss of $100.If the tax is increased to $2.50 per unit,the deadweight loss from the new tax would be

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 associated with some sellers dropping out of the market as a result of the tax is

Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. -Refer to Figure 8-8.After the tax goes into effect,consumer surplus is the area