Question 1

Figure 8-11 
-Refer to Figure 8-11.The length of the line segment connecting points A and B represents

Accepted Answer

A)  the difference between the price paid by buyers after the tax is imposed and the price received by sellers after the tax is imposed.
B)  the size of the tax.
C)  the "tax wedge."
D)  All of the above are correct.E) B) and C)
F) A) and D)

Question 2

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

Accepted Answer

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

Question 3

Figure 8-1 
-Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by L+M+Y represents

Accepted Answer

A)  consumer surplus after the tax.
B)  consumer surplus before the tax.
C)  producer surplus after the tax.
D)  producer surplus before the tax.E) A) and C)
F) C) and D)

Question 4

A tax placed on buyers of tuxedoes shifts the

Accepted Answer

A)  demand curve for tuxedoes downward,decreasing the price received by sellers of tuxedoes and causing the quantity of tuxedoes to increase.
B)  demand curve for tuxedoes downward,decreasing the price received by sellers of tuxedoes and causing the quantity of tuxedoes to decrease.
C)  supply curve for tuxedoes upward,decreasing the effective price paid by buyers of tuxedoes and causing the quantity of tuxedoes to increase.
D)  supply curve for tuxedoes upward,increasing the effective price paid by buyers of tuxedoes and causing the quantity of tuxedoes to decrease.E) A) and B)
F) A) and C)

Question 5

A deadweight loss is a consequence of a tax on a good because the tax

Accepted Answer

A)  induces the government to increase its expenditures.
B)  induces buyers to consume less,and sellers to produce less.
C)  increases the equilibrium price in the market.
D)  imposes a loss on buyers that is greater than the loss to sellers.E) A) and B)
F) B) and C)

Question 6

It does not matter whether a tax is levied on the buyers or the sellers of a good because

Accepted Answer

A)  sellers always bear the full burden of the tax.
B)  buyers always bear the full burden of the tax.
C)  buyers and sellers will share the burden of the tax.
D)  None of the above is correct;the incidence of the tax does depend on whether the buyers or the sellers are required to pay the tax.E) C) and D)
F) B) and D)

Question 7

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 for those sellers of the good who continue to sell it after the tax is imposed is

Accepted Answer

A)  $0.
B)  $1.
C)  $2.
D)  $3.E) A) and D)
F) A) and C)

Question 8

Figure 8-2
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-2.The imposition of the tax causes the price paid by buyers to

Accepted Answer

A)  decrease by $2.
B)  increase by $3.
C)  decrease by $4.
D)  increase by $5.E) All of the above
F) C) and D)

Question 9

Figure 8-9
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-9.The imposition of the tax causes the price received by sellers to

Accepted Answer

A)  increase from $600 to $800.
B)  decrease from $800 to $300.
C)  decrease from $600 to $300.
D)  remain unchanged at $600.E) None of the above
F) A) and B)

Question 10

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

Accepted Answer

A)  A.
B)  B+C.
C)  C+H.
D)  F.E) C) and D)
F) B) and C)

Question 11

Figure 8-13 
-Refer to Figure 8-13.Suppose the government places a $5 per-unit tax on this good.The amount of tax revenue collected by the government is

Accepted Answer

A)  $120.
B)  $80.
C)  $50.
D)  $30.E) A) and B)
F) A) and C)

Question 12

Figure 8-9
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-9.The amount of tax revenue received by the government is

Accepted Answer

A)  $4,000.
B)  $6,000.
C)  $10,000.
D)  $24,000.E) None of the above
F) A) and B) C

Question 13

Figure 8-11 2 on the vertical axis represents the A) difference between the price paid by buyers after the tax is imposed and the price paid by buyers before the tax is imposed. B) difference between the price received by sellers before the tax is imposed and the price received by sellers after the tax is imposed. C) price of the good before the tax is imposed. D) price of the good after the tax is imposed." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 8-11.The price labeled as P2 on the vertical axis represents the

Accepted Answer

A)  difference between the price paid by buyers after the tax is imposed and the price paid by buyers before the tax is imposed.
B)  difference between the price received by sellers before the tax is imposed and the price received by sellers after the tax is imposed.
C)  price of the good before the tax is imposed.
D)  price of the good after the tax is imposed.E) A) and D)
F) A) and C)

Question 14

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

Accepted Answer

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

Question 15

If a tax shifts the demand curve upward (or to the right) ,we can infer that the tax was levied on

Accepted Answer

A)  buyers of the good.
B)  sellers of the good.
C)  both buyers and sellers of the good.
D)  We cannot infer anything because the shift described is not consistent with a tax.E) A) and B)
F) All of the above D

Question 16

When a tax is imposed on the sellers of a good,the

Accepted Answer

A)  demand curve shifts downward by less than the amount of the tax.
B)  demand curve shifts downward by the amount of the tax.
C)  supply curve shifts upward by less than the amount of the tax.
D)  supply curve shifts upward by the amount of the tax.E) A) and B)
F) None of the above

Question 17

Figure 8-9
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-9.The equilibrium price and quantity before the imposition of the tax is

Accepted Answer

A)  P=$800 and Q=20.
B)  P=$600 and Q=20.
C)  P=$300 and Q=20.
D)  P=$600 and Q=40.E) C) and D)
F) A) and D)

Question 18

Figure 8-9
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-9.The loss of producer surplus as a result of the tax is

Accepted Answer

A)  $3,000.
B)  $6,000.
C)  $9,000.
D)  $12,000.E) B) and C)
F) B) and D)

Question 19

Figure 8-8
Suppose the government imposes a $10 per unit tax on a good. 
-Refer to Figure 8-8.One effect of the tax is to

Accepted Answer

A)  reduce consumer surplus from $180 to $72.
B)  reduce producer surplus from $96 to $24.
C)  create a deadweight loss of $72.
D)  All of the above are correct.E) B) and D)
F) A) and B)

Question 20

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) C) and D)
F) B) and C)

Exam 8: Application the Cost of Taxation: The Deadweight Loss of Taxation

Figure 8-11 -Refer to Figure 8-11.The length of the line segment connecting points A and B represents

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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 producer surplus that is represented by area

Correct AnswerverifiedC

Figure 8-1 -Refer to Figure 8-1.Suppose the government imposes a tax of P' - P'''.The area measured by L+M+Y represents

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A tax placed on buyers of tuxedoes shifts the

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A deadweight loss is a consequence of a tax on a good because the tax

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It does not matter whether a tax is levied on the buyers or the sellers of a good because

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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 producer surplus for those sellers of the good who continue to sell it after the tax is imposed is

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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 imposition of the tax causes the price paid by buyers to

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Figure 8-9 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-9.The imposition of the tax causes the price received by sellers to

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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

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Figure 8-13 -Refer to Figure 8-13.Suppose the government places a $5 per-unit tax on this good.The amount of tax revenue collected by the government is

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Figure 8-9 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-9.The amount of tax revenue received by the government is

Correct AnswerverifiedC

Figure 8-11 -Refer to Figure 8-11.The price labeled as P2 on the vertical axis represents the

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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

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If a tax shifts the demand curve upward (or to the right) ,we can infer that the tax was levied on

Correct AnswerverifiedD

When a tax is imposed on the sellers of a good,the

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Figure 8-9 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-9.The equilibrium price and quantity before the imposition of the tax is

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Figure 8-9 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-9.The loss of producer surplus as a result of the tax is

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Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. -Refer to Figure 8-8.One effect of the tax is to

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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 AnswerverifiedShow Answer

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C

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C

Figure 8-11 -Refer to Figure 8-11.The price labeled as P₂ on the vertical axis represents the

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D

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