Question 1

In order for Henry George's single tax on land not to distort economic incentives,the tax would have to be on

Accepted Answer

A)   improvements to land.
B)   land used for commercial purposes.
C)   land used for residential purposes.
D)   raw land.E) B) and C)
F) C) and D)

Question 2

What happens to the total surplus in a market when the government imposes a tax?

Accepted Answer

A)   Total surplus increases by the amount of the tax.
B)   Total surplus increases but by less than the amount of the tax.
C)   Total surplus decreases.
D)   Total surplus is unaffected by the tax.E) None of the above
F) B) and C)

Question 3

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 as a result of the tax is

Accepted Answer

A)   $1.50.
B)   $3.
C)   $4.50.
D)   $6.E) A) and D)
F) B) and D)

Question 4

Which of the following would likely have the smallest deadweight loss relative to the tax revenue?

Accepted Answer

A)   a head tax (that is,a tax everyone must pay regardless of what one does or buys) 
B)   an income tax
C)   a tax on compact discs
D)   a tax on caviarE) C) and D)
F) A) and B)

Question 5

Scenario 8-1
Claudia would be willing to pay as much as $100 per week to have her house cleaned.John's opportunity cost of cleaning Claudia's house is $70 per week.
-Refer to Scenario 8-1.Assume Claudia is required to pay a tax of $40 when she hires someone to clean her house for a week.Which of the following is correct?

Accepted Answer

A)   Claudia will now clean her own house.
B)   John will continue to clean Claudia's house,but his producer surplus will decline.
C)   Total economic welfare (consumer surplus plus producer surplus plus tax revenue) will increase.
D)   Claudia will continue to hire John to clean her house,but her consumer surplus will decline.E) B) and C)
F) None of the above

Question 6

Figure 8-5
Suppose that the government imposes a tax of P3 - P1. 
-Refer to Figure 8-5.The tax is levied on

Accepted Answer

A)   buyers only.
B)   sellers only.
C)   both buyers and sellers.
D)   This is impossible to determine from the figure.E) All of the above
F) None of the above

Question 7

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

Accepted Answer

A)   the price elasticity of demand.
B)   consumer surplus.
C)   the maximum amount that buyers are willing to pay for the good.
D)   the equilibrium price.E) C) and D)
F) A) and C)

Question 8

If T represents the size of the tax on a good and Q represents the quantity of the good that is sold,total tax revenue received by government can be expressed as

Accepted Answer

A)   T/Q.
B)   T+Q.
C)   TxQ.
D)   (TxQ) /Q.E) A) and D)
F) A) and C)

Question 9

The price elasticities of supply and demand affect

Accepted Answer

A)   both the size of the deadweight loss from a tax and the tax incidence.
B)   the size of the deadweight loss from a tax but not the tax incidence.
C)   the tax incidence but not the size of the deadweight loss from a tax.
D)   neither the size of the deadweight loss from a tax nor the tax incidence.E) None of the above
F) All of the above

Question 10

Today's property tax

Accepted Answer

A)   taxes only raw land.
B)   is exactly the same as Henry George's single-tax proposal.
C)   taxes land and the improvements to land.
D)   has no deadweight loss since the amount of revenue going to the government equals the reduction in the landowners' surplus.E) A) and C)
F) A) and D)

Question 11

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) B) and D)
F) None of the above

Question 12

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

Accepted Answer

A)   M.
B)   L+M+Y.
C)   J.
D)   J+K+I.E) All of the above
F) A) and B)

Question 13

When a tax is imposed on sellers,producer surplus decreases but consumer surplus increases.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements about a land tax is correct?

Accepted Answer

A)   A tax on raw land causes a small but positive deadweight loss.
B)   Landowners and renters share the burden of a tax on raw land.
C)   The government's tax revenue exactly equals the loss of the landowners.
D)   The supply of improvements to land such as sewers and roads is perfectly inelastic.E) B) and D)
F) None of the above

Question 15

David walks Carolyn's dog once a day for $50 per week.Carolyn values this service at $60 per week,while the opportunity cost of David'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) All of the above
F) A) and B)

Question 16

A tax on raw land causes

Accepted Answer

A)   a large deadweight loss.
B)   no deadweight loss.
C)   landlords to bear none of the burden of the tax.
D)   the generation of such a large amount of tax revenue that all other taxes could be eliminated.E) A) and B)
F) A) and C)

Question 17

Who once said that taxes are the price we pay for a civilized society?

Accepted Answer

A)   Aristotle
B)   George Washington
C)   Oliver Wendell Holmes,Jr.
D)   Ronald ReaganE) A) and B)
F) A) and C)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The deadweight loss from a $2 tax will be smallest in a market with

Accepted Answer

A)   elastic demand and elastic supply.
B)   elastic demand and inelastic supply.
C)   inelastic demand and elastic supply.
D)   inelastic demand and inelastic supply.E) All of the above
F) C) and D)

Question 20

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.E) B) and D)
F) A) and B)

Exam 8: Application: The Costs of Taxation

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

Correct Answer
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Correct Answer
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The deadweight loss from a $2 tax will be smallest in a market with

Correct Answer
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Today's property tax

Correct Answer
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A tax on raw land causes

Correct Answer
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Which of the following statements about a land tax is correct?

Correct Answer
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Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.The tax is levied on

Correct Answer
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A tax on a good causes the size of the market to increase.

Correct Answer
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Who once said that taxes are the price we pay for a civilized society?

Correct Answer
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The price elasticities of supply and demand affect

Correct Answer
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In 1776,the American Revolution was sparked by anger over

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

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 as a result of the tax is

Correct Answer
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If T represents the size of the tax on a good and Q represents the quantity of the good that is sold,total tax revenue received by government can be expressed as

Correct Answer
verified

When a tax is imposed on sellers,producer surplus decreases but consumer surplus increases.

Correct Answer
verified

In order for Henry George's single tax on land not to distort economic incentives,the tax would have to be on

Correct Answer
verified

David walks Carolyn's dog once a day for $50 per week.Carolyn values this service at $60 per week,while the opportunity cost of David'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
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Which of the following would likely have the smallest deadweight loss relative to the tax revenue?

Correct Answer
verified

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

Correct Answer
verified

What happens to the total surplus in a market when the government imposes a tax?

Correct Answer
verified

Exam 8: Application: The Costs of Taxation

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The deadweight loss from a $2 tax will be smallest in a market with

Correct AnswerverifiedShow Answer

Today's property tax

Correct AnswerverifiedShow Answer

A tax on raw land causes

Correct AnswerverifiedShow Answer

Which of the following statements about a land tax is correct?

Correct AnswerverifiedShow Answer

Figure 8-5 Suppose that the government imposes a tax of P3 - P1. -Refer to Figure 8-5.The tax is levied on

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Who once said that taxes are the price we pay for a civilized society?

Correct AnswerverifiedShow Answer

The price elasticities of supply and demand affect

Correct AnswerverifiedShow Answer

In 1776,the American Revolution was sparked by anger over

Correct AnswerverifiedShow Answer

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

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 as a result of the tax is

Correct AnswerverifiedShow Answer

If T represents the size of the tax on a good and Q represents the quantity of the good that is sold,total tax revenue received by government can be expressed as

Correct AnswerverifiedShow Answer

When a tax is imposed on sellers,producer surplus decreases but consumer surplus increases.

Correct AnswerverifiedShow Answer

In order for Henry George's single tax on land not to distort economic incentives,the tax would have to be on

Correct AnswerverifiedShow Answer

David walks Carolyn's dog once a day for $50 per week.Carolyn values this service at $60 per week,while the opportunity cost of David'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

Which of the following would likely have the smallest deadweight loss relative to the tax revenue?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What happens to the total surplus in a market when the government imposes a tax?

Correct AnswerverifiedShow Answer

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