Total surplus in a market does not change when the government imposes a tax on that market because the loss of consumer surplus and producer surplus is equal to the gain of government re
Trang 1Application: the Costs of Taxation
TRUE/FALSE
1 Total surplus is always equal to the sum of consumer surplus and producer surplus
MSC: Interpretive
2 Total surplus in a market does not change when the government imposes a tax on that market because the loss
of consumer surplus and producer surplus is equal to the gain of government revenue
MSC: Interpretive
3 When a tax is imposed on buyers, consumer surplus and producer surplus both decrease
MSC: Interpretive
4 When a tax is imposed on buyers, consumer surplus decreases but producer surplus increases
MSC: Interpretive
5 When a tax is imposed on sellers, producer surplus decreases but consumer surplus increases
MSC: Interpretive
6 When a tax is imposed on sellers, consumer surplus and producer surplus both decrease
MSC: Interpretive
7 Taxes affect market participants by increasing the price paid by the buyer and received by the seller
8 Taxes affect market participants by increasing the price paid by the buyer and decreasing the price received bythe seller
9 A tax raises the price received by sellers and lowers the price paid by buyers
10 Normally, both buyers and sellers of a good become worse off when the good is taxed
11 When a good is taxed, the tax revenue collected by the government equals the decrease in the welfare of buyers and sellers caused by the tax
MSC: Interpretive
529
Trang 212 A tax places a wedge between the price buyers pay and the price sellers receive.
13 A tax on a good causes the size of the market to increase
14 A tax on a good causes the size of the market to shrink
15 When a tax is imposed, the loss of consumer surplus and producer surplus as a result of the tax exceeds the taxrevenue collected by the government
16 Economists use the government’s tax revenue to measure the public benefit from a tax
17 Because taxes distort incentives, they cause markets to allocate resources inefficiently
18 Taxes cause deadweight losses because they prevent buyers and sellers from realizing some of the gains from trade
MSC: Interpretive
19 As the price elasticities of supply and demand increase, the deadweight loss from a tax increases
LOC: Elasticity TOP: Elasticity | Deadweight loss MSC: Applicative
20 The greater the elasticity of demand, the smaller the deadweight loss of a tax
LOC: Elasticity TOP: Elasticity | Deadweight loss MSC: Interpretive
21 The more inelastic are demand and supply, the greater is the deadweight loss of a tax
LOC: Elasticity TOP: Elasticity | Deadweight loss MSC: Applicative
22 The elasticities of the supply and demand curves in the market for cigarettes affect how much a tax distorts that market
LOC: Elasticity TOP: Elasticity | Deadweight loss MSC: Interpretive
23 If a tax did not induce buyers or sellers to change their behavior, it would not cause a deadweight loss
MSC: Interpretive
24 The most important tax in the U.S economy is the tax on corporations’ profits
25 The Social Security tax, and to a large extent, the federal income tax, are labor taxes
Trang 326 Taxes on labor tend to increase the number of hours that people choose to work.
27 Taxes on labor tend to encourage the elderly to retire early
28 Taxes on labor tend to encourage second earners to stay at home rather than work in the labor force
29 Economists disagree on whether labor taxes have a small or large deadweight loss
MSC: Definitional
30 The demand for bread is less elastic than the demand for donuts; hence, a tax on bread will create a larger deadweight loss than will the same tax on donuts, other things equal
LOC: Elasticity TOP: Elasticity | Deadweight loss MSC: Applicative
31 The larger the deadweight loss from taxation, the larger the cost of government programs
MSC: Interpretive
32 A tax on insulin is likely to cause a very large deadweight loss to society
LOC: Elasticity TOP: Deadweight loss | Elasticity MSC: Applicative
33 The deadweight loss of a tax rises even more rapidly than the size of the tax
MSC: Interpretive
34 As the size of a tax increases, the government's tax revenue rises, then falls
35 Tax revenues increase in direct proportion to increases in the size of the tax
36 If the size of a tax doubles, the deadweight loss doubles
MSC: Applicative
37 If the size of a tax triples, the deadweight loss increases by a factor of six
MSC: Applicative
38 A tax on unimproved land falls entirely on landowners because the supply of land is perfectly inelastic
39 Because the supply of land is perfectly elastic, the deadweight loss of a tax on land is very large
LOC: Elasticity TOP: Land tax | Deadweight loss MSC: Interpretive
Trang 440 Economist Arthur Laffer made the argument that tax rates in the United States were so high that reducing the rates would increase tax revenue.
41 The Laffer curve is the curve showing how tax revenue varies as the size of the tax varies
42 The result of the large tax cuts in the first Reagan Administration demonstrated very convincingly that Arthur Laffer was correct when he asserted that cuts in tax rates would increase tax revenue
43 The idea that tax cuts would increase the quantity of labor supplied, thus increasing tax revenue, became know
as supply-side economics
MSC: Definitional
44 The Laffer curve illustrates how taxes in markets with greater elasticities of demand compare to taxes in markets with smaller elasticities of supply
45 The more elastic are supply and demand in a market, the greater are the distortions caused by a tax on that market, and the more likely it is that a tax cut in that market will raise tax revenue
LOC: Elasticity TOP: Elasticity | Deadweight loss MSC: Applicative
46 When the government imposes taxes on buyers and sellers of a good, society loses some of the benefits of market efficiency
Trang 5SHORT ANSWER
1 Suppose the government levies a tax of the vertical distance from point A to point B Using the graph shown, determine the value of each of the following:
a equilibrium price before the tax
b consumer surplus before the tax
c producer surplus before the tax
d total surplus before the tax
e consumer surplus after the tax
f producer surplus after the tax
g total tax revenue to the government
h total surplus (consumer surplus+producer surplus+tax revenue) after the tax
i deadweight loss
A
B
Demand Supply
2 John has been in the habit of mowing Willa's lawn each week for $20 John's opportunity cost is $15, and Willa would be willing to pay $25 to have her lawn mowed What is the maximum tax the government can impose on lawn mowing without discouraging John and Willa from continuing their mutually beneficial arrangement?
ANS:
If the tax is less than $10, there will exist a price at which both John and Willa will still benefit from the mowing arrangement If the tax is $10, a price can be set which will leave John and Willa neither better off nor worse off from the lawn-mowing arrangement If the tax is greater than $10, all possible prices will leave at least one of the parties worse off from the lawn-mowing arrangement
TOP: Efficiency MSC: Applicative
Trang 63 Use the following graph shown to fill in the table that follows.
Demand Supply
Q1 Q2
P4
Quantity Price
4 Suppose that instead of a supply-demand diagram, you are given the following information:
Qs = 100 + 3P
Qd = 400 - 2P
From this information compute equilibrium price and quantity Now suppose that a tax is placed on buyers so that
Qd = 400 - (2P + T).
If T = 15, solve for the new equilibrium price and quantity (Note: P is the price received by sellers and P + T is the
price paid by buyers.) Compare these answers for equilibrium price and quantity with your first answers What does this show you?
ANS:
Prior to the tax, the equilibrium price would be $60 and the equilibrium quantity would be 280 After the tax is
imposed, P, the price received by sellers would be $57 The price paid by buyers would be $72 The quantity sold
would be 271 The new answer shows three obvious facts First, buyers pay more with a tax Second, sellers receiveless with a tax Third, the size of the market shrinks when a tax is imposed on a product
Trang 75 Using demand and supply diagrams, show the difference in deadweight loss between (a) a market with inelastic demand and supply and (b) a market with elastic demand and supply.
ANS:
TOP: Deadweight loss | Elasticity MSC: Applicative
Trang 86 Illustrate on three demand-and-supply graphs how the size of a tax (small, medium and large) can alter total revenue and deadweight loss.
ANS:
Sec00 - Application: The Costs of Taxation
MULTIPLE CHOICE
1 In 1776, the American Revolution was sparked by anger over
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
MSC: Definitional
Trang 92 Anger over British taxes played a significant role in bringing about the
a election of John Adams as the second American president
b American Revolution
c War of 1812
d “no new taxes” clause in the U.S Constitution
d Oliver Wendell Holmes, Jr
MSC: Definitional
5 To fully understand how taxes affect economic well-being, we must
a assume that economic well-being is not affected if all tax revenue is spent on goods and services forthe people who are being taxed
b compare the taxes raised in the United States with those raised in other countries, especially France
c compare the reduced welfare of buyers and sellers to the amount of revenue the government raises
d take into account the fact that almost all taxes reduce the welfare of buyers, increase the welfare of sellers, and raise revenue for the government
MSC: Interpretive
6 To fully understand how taxes affect economic well-being, we must compare the
a benefit to buyers with the loss to sellers
b price paid by buyers to the price received by sellers
c profits earned by firms to the losses incurred by consumers
d decrease in total surplus to the increase in revenue raised by the government
MSC: Interpretive
7 To fully understand how taxes affect economic well-being, we must compare the
a consumer surplus to the producer surplus
b price paid by buyers to the price received by sellers
c reduced welfare of buyers and sellers to the revenue raised by the government
d consumer surplus to the deadweight loss
MSC: Interpretive
Trang 10Sec01 - Application: The Costs of Taxation - The Deadweight Loss of TaxationMULTIPLE CHOICE
1 When a tax is levied on a good, the buyers and sellers of the good share the burden,
a provided the tax is levied on the sellers
b provided the tax is levied on the buyers
c provided a portion of the tax is levied on the buyers, with the remaining portion levied on the sellers
d regardless of how the tax is levied
MSC: Interpretive
2 A tax on a good
a raises the price that buyers effectively pay and raises the price that sellers effectively receive
b raises the price that buyers effectively pay and lowers the price that sellers effectively receive
c lowers the price that buyers effectively pay and raises the price that sellers effectively receive
d lowers the price that buyers effectively pay and lowers the price that sellers effectively receive
MSC: Interpretive
3 When a tax is placed on a product, the price paid by buyers
a rises, and the price received by sellers rises
b rises, and the price received by sellers falls
c falls, and the price received by sellers rises
d falls, and the price received by sellers falls
MSC: Interpretive
4 A tax affects
a buyers only
b sellers only
c buyers and sellers only
d buyers, sellers, and the government
d All of the above are correct
MSC: Interpretive
6 What happens to the total surplus in a market when the government imposes a tax?
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
MSC: Applicative
Trang 117 When a good is taxed,
a both buyers and sellers of the good are made worse off
b only buyers are made worse off, because they ultimately bear the burden of the tax
c only sellers are made worse off, because they ultimately bear the burden of the tax
d neither buyers nor sellers are made worse off, since tax revenue is used to provide goods and
services that would otherwise not be provided in a market economy
MSC: Interpretive
9 When a tax is imposed on a good, the
a supply curve for the good always shifts
b demand curve for the good always shifts
c amount of the good that buyers are willing to buy at each price always remains unchanged
d equilibrium quantity of the good always decreases
MSC: Interpretive
10 A tax levied on the sellers of a good shifts the
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)
MSC: Interpretive
11 A tax levied on the buyers of a good shifts the
a supply curve upward (or to the left)
b supply curve downward (or to the right)
c demand curve downward (or to the left)
d demand curve upward (or to the right)
MSC: Interpretive
12 If a tax shifts the supply curve upward (or to the left), we can infer that the tax was levied on
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
MSC: Interpretive
Trang 1213 If a tax shifts the supply curve downward (or to the right), we can infer that the tax was levied on
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
MSC: Interpretive
14 If a tax shifts the demand curve downward (or to the left), we can infer that the tax was levied on
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
MSC: Interpretive
15 If a tax shifts the demand curve upward (or to the right), we can infer that the tax was levied on
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
MSC: Interpretive
16 When a tax is imposed on the buyers of a good, the demand curve shifts
a downward by the amount of the tax
b upward by the amount of the tax
c downward by less than the amount of the tax
d upward by more than the amount of the tax
MSC: Interpretive
17 When a tax is imposed on the sellers of a good, the
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
MSC: Interpretive
18 A tax placed on buyers of tires shifts the
a demand curve for tires downward, decreasing the price received by sellers of tires and causing the quantity of tires to increase
b demand curve for tires downward, decreasing the price received by sellers of tires and causing the quantity of tires to decrease
c supply curve for tires upward, decreasing the effective price paid by buyers of tires and causing the quantity of tires to increase
d supply curve for tires upward, increasing the effective price paid by buyers of tires and causing the quantity of tires to decrease
MSC: Applicative
Trang 1319 Suppose a tax is imposed on the buyers of fast-food French fries The burden of the tax will
a fall entirely on the buyers of fast-food French fries
b fall entirely on the sellers of fast-food French fries
c be shared equally by the buyers and sellers of fast-food French fries
d be shared by the buyers and sellers of fast-food French fries but not necessarily equally
MSC: Interpretive
20 It does not matter whether a tax is levied on the buyers or the sellers of a good because
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
MSC: Interpretive
21 When alcohol is taxed and sellers of alcohol are required to pay the tax to the government,
a the quantity of alcohol bought and sold in the market is reduced
b the price paid by buyers of alcohol decreases
c the demand for alcohol decreases
d there is a movement downward and to the right along the demand curve for alcohol
MSC: Interpretive
22 One result of a tax, regardless of whether the tax is placed on the buyers or the sellers, is that the
a size of the market is unchanged
b price the seller effectively receives is higher
c supply curve for the good shifts upward by the amount of the tax
d tax reduces the welfare of both buyers and sellers
MSC: Interpretive
23 When a tax is placed on the buyers of a product, a result is that buyers effectively pay
a less than before the tax, and sellers effectively receive less than before the tax
b less than before the tax, and sellers effectively receive more than before the tax
c more than before the tax, and sellers effectively receive less than before the tax
d more than before the tax, and sellers effectively receive more than before the tax
MSC: Interpretive
24 When a tax is levied on a good,
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
MSC: Interpretive
Trang 1425 When a tax is levied on the buyers of a good, the
a supply curve shifts upward by the amount of the tax
b quantity supplied increases for all conceivable prices of the good
c buyers of the good will send tax payments to the government
d demand curve shifts to the right by the horizontal distance of the tax
MSC: Definitional
26 When a tax is levied on the sellers of a good, the
a supply curve shifts upward by the amount of the tax
b quantity demanded decreases for all conceivable prices of the good
c quantity supplied increases for all conceivable prices of the good
d None of the above is correct
d upward by less than $2.00
MSC: Interpretive
28 When a tax on a good is enacted,
a buyers and sellers share the burden of the tax regardless of whether the tax is levied on buyers or onsellers
b buyers always bear the full burden of the tax
c sellers always bear the full burden of the tax
d sellers bear the full burden of the tax if the tax is levied on them; buyers bear the full burden of the tax if the tax is levied on them
MSC: Interpretive
29 A tax placed on a good
a causes the effective price to sellers to increase
b affects the welfare of buyers of the good but not the welfare of sellers
c causes the equilibrium quantity of the good to decrease
d creates a burden that is usually borne entirely by the sellers of the good
MSC: Interpretive
30 When a tax is levied on buyers of a good,
a government collects too little revenue to justify the tax if the equilibrium quantity of the good decreases as a result of the tax
b there is an increase in the quantity of the good supplied
c a wedge is placed between the price buyers pay and the price sellers effectively receive
d the effective price to buyers decreases because the demand curve shifts leftward
MSC: Applicative
Trang 1531 When a tax is levied on a good,
a government collects revenues which might justify the loss in total welfare
b there is a decrease in the quantity of the good bought and sold in the market
c a wedge is placed between the price buyers pay and the price sellers effectively receive
d All of the above are correct
MSC: Applicative
32 When a tax is levied on a good,
a government revenues exceed the loss in total welfare
b there is a decrease in the quantity of the good bought and sold in the market
c the price that sellers receive exceeds the price that buyers pay
d All of the above are correct
MSC: Applicative
33 The benefit to buyers of participating in a market is measured by
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
MSC: Interpretive
35 The benefit that government receives from a tax is measured by
a the change in the equilibrium quantity of the good
b the change in the equilibrium price of the good
c tax revenue
d total surplus
MSC: Interpretive
Trang 1637 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
a T/Q
b T+Q
c TxQ
d (TxQ)/Q
MSC: Interpretive
38 When a tax is levied on buyers, the
a supply curves shifts upward by the amount of the tax
b tax creates a wedge between the price buyers effectively pay and the price sellers receive
c tax has no effect on the well-being of sellers
d All of the above are correct
MSC: Interpretive
39 For the purpose of analyzing the gains and losses from a tax on a good, we use tax revenue as a direct measure of the
a government's benefit from the tax
b government's loss from the tax
c deadweight loss of the tax
d overall net gain to society of the tax
d consumer surplus loss
MSC: Definitional
41 A tax on a good
a gives buyers an incentive to buy more of the good than they otherwise would buy
b gives sellers an incentive to produce less of the good than they otherwise would produce
c creates a benefit to the government, the size of which exceeds the loss in surplus to buyers and sellers
d All of the above are correct
MSC: Interpretive
42 When the price of a good is measured in dollars, then the size of the deadweight loss that results from taxing that good is measured in
a units of the good that is being taxed
b units of a related good that is not being taxed
c dollars
d percentage change
MSC: Analytical
Trang 1743 The benefit to sellers of participating in a market is measured by the
a amount of taxes collected on sales of the good
b producer surplus
c amount sellers receive for their product
d sellers' willingness to sell
MSC: Interpretive
44 When the government places a tax on a product, the cost of the tax to buyers and sellers
a is less than the revenue raised from the tax by the government
b is equal to the revenue raised from the tax by the government
c exceeds the revenue raised from the tax by the government
d Without additional information, such as the elasticity of demand for this product, it is impossible to compare the cost of a tax to buyers and sellers with tax revenue
MSC: Applicative
45 Relative to a situation in which gasoline is not taxed, the imposition of a tax on gasoline causes the quantity of gasoline demanded to
a decrease and the quantity of gasoline supplied to decrease
b decrease and the quantity of gasoline supplied to increase
c increase and the quantity of gasoline supplied to decrease
d increase and the quantity of gasoline supplied to increase
MSC: Interpretive
46 Which of the following quantities decrease in response to a tax on a good?
a the equilibrium quantity in the market for the good, the effective price of the good paid by buyers, and consumer surplus
b the equilibrium quantity in the market for the good, producer surplus, and the well-being of buyers
of the good
c the effective price received by sellers of the good, the wedge between the effective price paid by
buyers and the effective price received by sellers, and consumer surplus
d None of the above is necessarily correct unless we know whether the tax is levied on buyers or on sellers
MSC: Applicative
47 For a good that is taxed, the area on the relevant supply-and-demand graph that represents
government’s tax revenue is a
MSC: Interpretive
Trang 1848 For a good that is taxed, the area on the relevant supply-and-demand graph that represents government’s tax revenue is
a smaller than the area that represents the loss of consumer surplus and producer surplus caused by the tax
b bounded by the supply curve, the demand curve, the effective price paid by buyers, and the effective price received by sellers
c a right triangle
d a triangle, but not necessarily a right triangle
MSC: Applicative
49 Total surplus with a tax is equal to
a consumer surplus plus producer surplus
b consumer surplus minus producer surplus
c consumer surplus plus producer surplus minus tax revenue
d consumer surplus plus producer surplus plus tax revenue
MSC: Interpretive
50 Taxes cause deadweight losses because they
a lead to losses in surplus for consumers and for producers that, when taken together, exceed tax revenue collected by the government
b distort incentives to both buyers and sellers
c prevent buyers and sellers from realizing some of the gains from trade
d All of the above are correct
MSC: Interpretive
51 Taxes cause deadweight losses because taxes
a reduce the sum of producer and consumer surpluses by more than the amount of tax revenue
b prevent buyers and sellers from realizing some of the gains from trade
c cause marginal buyers and marginal sellers to leave the market, causing the quantity sold to fall
d All of the above are correct
MSC: Interpretive
52 Deadweight loss measures the loss
a in a market to buyers and sellers that is not offset by an increase in government revenue
b in revenue to the government when buyers choose to buy less of the product because of the tax
c of equality in a market due to government intervention
d of total revenue to business firms due to the price wedge caused by the tax
MSC: Definitional
Trang 1954 Deadweight loss is the
a decline in total surplus that results from a tax
b decline in government revenue when taxes are reduced in a market
c decline in consumer surplus when a tax is placed on buyers
d loss of profits to business firms when a tax is imposed
MSC: Definitional
55 A deadweight loss is a consequence of a tax on a good because the tax
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
MSC: Interpretive
56 For good A, the supply curve is the typical upward-sloping straight line, and the demand curve is thetypical downward-sloping straight line When good A is taxed, the area on the relevant supply-and-demand graph that represents the deadweight loss is
a larger than the area that represents consumer surplus in the absence of the tax
b larger than the area that represents government’s tax revenue
c a triangle
d All of the above are correct
MSC: Interpretive
57 For good B, the supply curve is the typical upward-sloping straight line, and the demand curve is thetypical downward-sloping straight line When good B is taxed, the area on the relevant supply-and-demand graph that represents
a government’s tax revenue is a rectangle
b the deadweight loss of the tax is a triangle
c the loss of consumer surplus caused by the tax is neither a rectangle nor a triangle
d All of the above are correct
MSC: Applicative
Trang 2059 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 200 per month when there is no tax Then a tax of $5 per widget is imposed As a result, the government is able to raise $750 per month in tax revenue We can conclude that the
equilibrium quantity of widgets has fallen by
a 25 per month
b 50 per month
c 75 per month
d 100 per month
MSC: Applicative
60 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 200 per month when there is no tax Then a tax of $5 per widget is imposed As a result, the government is able to raise $750 per month in tax revenue We can conclude that the post tax quantity of widgets is
a 50 per month
b 75 per month
c 100 per month
d 150 per month
MSC: Applicative
61 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 200 per month when there is no tax Then a tax of $5 per widget is imposed The pricepaid by buyers increases by $2 and the after-tax price received by sellers falls by $3 The
government is able to raise $750 per month in revenue from the tax The deadweight loss from the tax is
a $250
b $125
c $75
d $50
MSC: Applicative
Trang 21Quantity Price
62 Refer to Figure 8-1 Suppose the government imposes a tax of P’ - P’’’ Total surplus before the
tax is measured by the area
a I+Y
b J+K+L+M
d I+J+K+L+M+Y
MSC: Analytical
63 Refer to Figure 8-1 Suppose the government imposes a tax of P’ - P’’’ The area measured by
I+J+K+L+M+Y represents
a total surplus before the tax
b total surplus after the tax
c consumer surplus before the tax
d deadweight loss from the tax
MSC: Analytical
64 Refer to Figure 8-1 Suppose the government imposes a tax of P’ - P’’’ Total surplus after the tax
is measured by the area
a I+Y
b J+K+L+M
c I+Y+B
d I+J+K+L+M+Y
MSC: Analytical
65 Refer to Figure 8-1 Suppose the government imposes a tax of P’ - P’’’ The area measured by
J+K+L+M represents
a total surplus after the tax
b total surplus before the tax
c deadweight loss from the tax
d tax revenue
MSC: Analytical
Trang 2266 Refer to Figure 8-1 Suppose the government imposes a tax of P’ - P’’’ The area measured by
K+L represents
a tax revenue
b consumer surplus before the tax
c producer surplus after the tax
d total surplus before the tax
MSC: Analytical
67 Refer to Figure 8-1 Suppose the government imposes a tax of P’ - P’’’ The tax revenue is
measured by the area
a K+L
b I+Y
c J+K+L+M
d I+J+K+L+M+Y
MSC: Analytical
68 Refer to Figure 8-1 Suppose the government imposes a tax of P’ - P’’’ The area measured by
L+M+Y represents
a consumer surplus after the tax
b consumer surplus before the tax
c producer surplus after the tax
d producer surplus before the tax
MSC: Analytical
69 Refer to Figure 8-1 Suppose the government imposes a tax of P’ - P’’’ The producer surplus
before the tax is measured by the area
a I+J+K
b I+Y
d M
MSC: Analytical
70 Refer to Figure 8-1 Suppose the government imposes a tax of P’ - P’’’ The area measured by M
represents
a consumer surplus after the tax
b consumer surplus before the tax
c producer surplus after the tax
d producer surplus before the tax
MSC: Analytical
Trang 2371 Refer to Figure 8-1 Suppose the government imposes a tax of P’ - P’’’ The producer surplus
after the tax is measured by the area
a M
b L+M+N+Y+B
d J
MSC: Analytical
72 Refer to Figure 8-1 Suppose the government imposes a tax of P’ - P’’’ The area measured by
J+K+I represents
a consumer surplus after the tax
b consumer surplus before the tax
c producer surplus after the tax
d producer surplus before the tax
MSC: Analytical
73 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
a M
b L+M+Y
c J
d J+K+I
MSC: Analytical
74 Refer to Figure 8-1 Suppose the government imposes a tax of P’ - P’’’ The area measured by J
represents
a consumer surplus after the tax
b consumer surplus before the tax
c producer surplus after the tax
d producer surplus before the tax
MSC: Analytical
75 Refer to Figure 8-1 Suppose the government imposes a tax of P’ - P’’’ The consumer surplus
after the tax is measured by the area
a J+K+I
b J
c M
d L+M+Y
MSC: Analytical
Trang 2476 Refer to Figure 8-1 Suppose the government imposes a tax of P’ - P’’’ The area measured by
I+Y represents the
a deadweight loss due to the tax
b loss in consumer surplus due to the tax
c loss in producer surplus due to the tax
d total surplus before the tax
MSC: Analytical
77 Refer to Figure 8-1 Suppose the government imposes a tax of P’ - P’’’ The deadweight loss due
to the tax is measured by the area
a J+K+L+M
b J+K+L+M+N
c I+Y
d I+Y+B
MSC: Applicative
Trang 2579 Refer to Figure 8-2 The imposition of the tax causes the price paid by buyers to
a decrease by $2
b increase by $3
c decrease by $4
d increase by $5
MSC: Applicative
Trang 2685 Refer to Figure 8-2 The amount of deadweight loss as a result of the tax is
a $2.50
b $5
c $7.50
d $10
MSC: Applicative
88 Refer to Figure 8-2 Consumer surplus without the tax is
a $6, and consumer surplus with the tax is $1.50
b $6, and consumer surplus with the tax is $4.50
c $10, and consumer surplus with the tax is $1.50
d $10, and consumer surplus with the tax is $4.50
MSC: Applicative
89 Refer to Figure 8-2 Producer surplus without the tax is
a $4, and producer surplus with the tax is $1
b $4, and producer surplus with the tax is $3
c $10, and producer surplus with the tax is $1
d $10, and producer surplus with the tax is $3
MSC: Applicative
90 Refer to Figure 8-2 Total surplus without the tax is
a $10, and total surplus with the tax is $2.50
b $10, and total surplus with the tax is $7.50
c $20, and total surplus with the tax is $2.50
d $20, and total surplus with the tax is $7.50
MSC: Applicative
Trang 2791 Refer to Figure 8-2 The loss of consumer surplus associated with some buyers dropping out of the
market as a result of the tax is
a $0
b $1.50
c $3
d $4.50
MSC: Applicative
92 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
a $0
b $1.50
c $3
d $4.50
MSC: Applicative
93 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
a $0
b $1
c $2
d $3
MSC: Applicative
94 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
a $0
b $1
c $2
d $3
MSC: Applicative
Trang 28Figure 8-3
The vertical distance between points A and C represents a tax in the market
Demand Supply
95 Refer to Figure 8-3 The equilibrium price before the tax is imposed is
a P1
b P2
c P3
d P4
MSC: Applicative
Trang 2999 Refer to Figure 8-3 The per-unit burden of the tax on sellers is
a P3 - P1
b P3 - P2
c P2 - P1
d P4 - P3
MSC: Analytical
Trang 30105 Refer to Figure 8-3 Which of the following equations is valid for the tax revenue that the tax
provides to the government?
a Tax revenue = (P2 - P1)xQ1
b Tax revenue = (P3 - P1)xQ1
c Tax revenue = (P3 - P2)xQ1
d Tax revenue = (P3 - P1)x(Q2 - Q1)
107 Refer to Figure 8-4 The equilibrium price before the tax is imposed is
a $24, and the equilibrium quantity is 70
b $16, and the equilibrium quantity is 100
c $10, and the equilibrium quantity is 70
d $8, and the equilibrium quantity is 100
MSC: Interpretive
Trang 31108 Refer to Figure 8-4 The price that buyers effectively pay after the tax is imposed is
a $24
b $16
c $14
d $10
MSC: Applicative
Trang 32114 Refer to Figure 8-4 The amount of deadweight loss as a result of the tax is
a $210
b $420
c $980
d $1,600
MSC: Applicative
Figure 8-5
Suppose that the government imposes a tax of P3 - P1
Demand Supply
Q1 Q2
I
P4
Quantity Price
117 Refer to Figure 8-5 The equilibrium price before the tax is imposed is
a P1
b P2
c P3
d P4
MSC: Interpretive
Trang 33118 Refer to Figure 8-5 The price that buyers effectively pay after the tax is imposed is
a P1
b P2
c P3
d P4
MSC: Applicative
120 Refer to Figure 8-5 The tax is levied on
a buyers only
b sellers only
c both buyers and sellers
d This is impossible to determine from the figure
MSC: Applicative