Question 1

Figure 8-7
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-7.As a result of the tax,consumer surplus decreases by

Accepted Answer

A)  $130,producer surplus decreases by $170,tax revenue is $240,and deadweight loss is $60.
B)  $150,producer surplus decreases by $150,tax revenue is $240,and deadweight loss is $60.
C)  $160,producer surplus decreases by $160,tax revenue is $240,and deadweight loss is $80.
D)  $240,producer surplus decreases by $240,tax revenue is $400,and deadweight loss is $80.E) B) and C)
F) None of the above

Question 2

Diana is a personal trainer whose client Charles pays $80 per hour-long session.Charles values this service at $100 per hour,while the opportunity cost of Diana's time is $75 per hour.The government places a tax of $10 per hour on personal trainers.Before the tax,what is the total surplus?

Accepted Answer

A)  $25
B)  $20
C)  $5
D)  $0E) C) and D)
F) B) and C)

Question 3

A $2 tax per gallon of paint placed on the buyers of paint will shift the demand curve

Accepted Answer

A)  downward by exactly $2.
B)  downward by less than $2.
C)  upward by exactly $2.
D)  upward by less than $2.E) A) and B)
F) C) and D)

Question 4

Figure 8-12 
-Refer to Figure 8-12.Suppose a $3 per-unit tax is placed on this good.The loss of producer surplus resulting from this tax is

Accepted Answer

A)  $5.50.
B)  $17.50.
C)  $22.50.
D)  $45.00E) A) and D)
F) A) and B)

Question 5

Kate is a personal trainer whose client William pays $80 per hour-long session.William values this service at $100 per hour,while the opportunity cost of Kate's time is $75 per hour.The government places a tax of $10 per hour on personal trainers.After the tax,what is likely to happen in the market for personal training?

Accepted Answer

A)  Kate and William will agree to a new price somewhere between $85 and $100.
B)  Kate and William will agree to a new price somewhere between $70 and $110.
C)  Kate will no longer offer personal training services to William because she must charge more than $100 in order to cover her opportunity costs and pay the tax.
D)  The price will remain at $80,and Kate will pay the $10 tax.E) All of the above
F) A) and B)

Question 6

For widgets,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.A tax of $15 per unit is imposed on widgets.The tax reduces the equilibrium quantity in the market by 300 units.The deadweight loss from the tax is

Accepted Answer

A)  $1,750.
B)  $2,250.
C)  $3,000.
D)  $4,500.E) B) and C)
F) A) and D)

Question 7

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

Accepted Answer

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

Question 8

Figure 8-6
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-6.What happens to total surplus in this market when the tax is imposed?

Accepted Answer

A)  Total surplus increases by $1,500.
B)  Total surplus increases by $3,000.
C)  Total surplus decreases by $1,500.
D)  Total surplus decreases by $,3000.E) A) and C)
F) C) and D)

Question 9

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

Accepted Answer

A)  total surplus after the tax.
B)  total surplus before the tax.
C)  deadweight loss from the tax.
D)  tax revenue.E) A) and D)
F) None of the above

Question 10

Figure 8-10 
-Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.With the tax,the producer surplus is

Accepted Answer

A)  (P5-0) x Q5.
B)  1/2 x (P5-0) x Q5.
C)  (P8-0) x Q2.
D)  1/2 x (P8-0) x Q2.E) A) and B)
F) All of the above

Question 11

Figure 8-4
The vertical distance between points A and B represents a tax in the market. 
-Refer to Figure 8-4.The price that buyers effectively pay after the tax is imposed is

Accepted Answer

A)  $12.
B)  between $8 and $12.
C)  between $5 and $8.
D)  $5.E) A) and B)
F) C) and D)

Question 12

Suppose a tax of $3 per unit is imposed on a good.The supply curve is a typical upward-sloping straight line,and the demand curve is a typical downward-sloping straight line.The tax decreases consumer surplus by $3,900 and decreases producer surplus by $3,000.The tax generates tax revenue of $6,000.The tax decreased the equilibrium quantity of the good from

Accepted Answer

A)  2,000 to 1,500.
B)  2,400 to 2,000.
C)  2,600 to 2,000.
D)  3,000 to 2,400.E) A) and C)
F) All of the above

Question 13

Figure 8-3
The vertical distance between points A and C represents a tax in the market. 
-Refer to Figure 8-3.Which of the following equations is valid for the tax revenue that the tax provides to the government?

Accepted Answer

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) E) A) and B)
F) A) and C)

Question 14

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

Accepted Answer

A)  tax revenue.
B)  consumer surplus before the tax.
C)  producer surplus after the tax.
D)  total surplus before the tax.E) All of the above
F) B) and D)

Question 15

Figure 8-12 
-Refer to Figure 8-12.Suppose a $3 per-unit tax is placed on this good.The per-unit burden of the tax on buyers is

Accepted Answer

A)  $1.
B)  $2.
C)  $3.
D)  $4.E) A) and B)
F) None of the above

Question 16

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 paid by buyers to

Accepted Answer

A)  increase from $600 to $800.
B)  increase from $300 to $800.
C)  decrease from $600 to $300.
D)  remain unchanged at $600.E) A) and C)
F) A) and B)

Question 17

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

Accepted Answer

A)  $7.
B)  $5.
C)  $4.
D)  $3.E) A) and B)
F) C) and D)

Question 18

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,total surplus in this market is

Accepted Answer

A)  $3,000.
B)  $4,800.
C)  $6,000.
D)  $7,200.E) A) and B)
F) A) and C)

Question 19

When motorcycles are taxed and sellers of motorcycles are required to pay the tax to the government,

Accepted Answer

A)  the quantity of motorcycles bought and sold in the market is reduced.
B)  the price paid by buyers of motorcycles decreases.
C)  the demand for motorcycles decreases.
D)  there is a movement downward and to the right along the demand curve for motorcycles.E) C) and D)
F) A) and C)

Question 20

If a tax shifts the supply curve upward (or to the left) ,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 D)
F) C) and D)

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

Figure 8-6 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-6.What happens to total surplus in this market when the tax is imposed?

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Diana is a personal trainer whose client Charles pays $80 per hour-long session.Charles values this service at $100 per hour,while the opportunity cost of Diana's time is $75 per hour.The government places a tax of $10 per hour on personal trainers.Before the tax,what is the total surplus?

Correct Answer
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A $2 tax per gallon of paint placed on the buyers of paint will shift the demand curve

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,total surplus in this market is

Correct Answer
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Figure 8-7 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-7.As a result of the tax,consumer surplus decreases by

Correct Answer
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If a tax shifts the supply curve upward (or to the left) ,we can infer that the tax was levied on

Correct Answer
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Figure 8-12 -Refer to Figure 8-12.Suppose a $3 per-unit tax is placed on this good.The per-unit burden of the tax on buyers is

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

Correct Answer
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For widgets,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.A tax of $15 per unit is imposed on widgets.The tax reduces the equilibrium quantity in the market by 300 units.The deadweight loss from the tax is

Correct Answer
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When motorcycles are taxed and sellers of motorcycles are required to pay the tax to the government,

Correct Answer
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Correct Answer
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Figure 8-3 The vertical distance between points A and C represents a tax in the market. -Refer to Figure 8-3.Which of the following equations is valid for the tax revenue that the tax provides to the government?

Correct Answer
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Figure 8-10 -Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.With the tax,the producer surplus is

Correct Answer
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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 producer surplus with the tax is

Correct Answer
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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 paid by buyers to

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

Correct Answer
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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

Correct Answer
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Figure 8-12 -Refer to Figure 8-12.Suppose a $3 per-unit tax is placed on this good.The loss of producer surplus resulting from this tax is

Correct Answer
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Figure 8-4 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-4.The price that buyers effectively pay after the tax is imposed is

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

Figure 8-6 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-6.What happens to total surplus in this market when the tax is imposed?

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Diana is a personal trainer whose client Charles pays $80 per hour-long session.Charles values this service at $100 per hour,while the opportunity cost of Diana's time is $75 per hour.The government places a tax of $10 per hour on personal trainers.Before the tax,what is the total surplus?

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A $2 tax per gallon of paint placed on the buyers of paint will shift the demand curve

Correct AnswerverifiedShow Answer

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,total surplus in this market is

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Figure 8-7 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-7.As a result of the tax,consumer surplus decreases by

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

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Figure 8-12 -Refer to Figure 8-12.Suppose a $3 per-unit tax is placed on this good.The per-unit burden of the tax on buyers is

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

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For widgets,the supply curve is the typical upward-sloping straight line,and the demand curve is the typical downward-sloping straight line.A tax of $15 per unit is imposed on widgets.The tax reduces the equilibrium quantity in the market by 300 units.The deadweight loss from the tax is

Correct AnswerverifiedShow Answer

When motorcycles are taxed and sellers of motorcycles are required to pay the tax to the government,

Correct AnswerverifiedShow Answer

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.Which of the following equations is valid for the tax revenue that the tax provides to the government?

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Figure 8-10 -Refer to Figure 8-10.Suppose the government imposes a tax that reduces the quantity sold in the market after the tax to Q2.With the tax,the producer surplus 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 producer surplus with 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 imposition of the tax causes the price paid by buyers to

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

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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

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Figure 8-12 -Refer to Figure 8-12.Suppose a $3 per-unit tax is placed on this good.The loss of producer surplus resulting from this tax is

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Figure 8-4 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-4.The price that buyers effectively pay after the tax is imposed is

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