Question 1

The larger the deadweight loss from taxation, the larger the cost of government programs.

Accepted Answer

A) True 
 B)False

Question 2

Figure 8-13
 
-Refer to Figure 8-13. As the size of the tax increases from $3 to $6 to $9, what happens to tax revenues?

Accepted Answer

When the tax is $3, tax revenue is $3 x ...

Question 3

Figure 8-10
​
  ​
-Refer to Figure 8-10. Suppose the government places a $3 tax per unit on this good. How much is consumer surplus after the tax is imposed?

Accepted Answer

Consumer surplus is ...

Question 4

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.

Accepted Answer

A) True 
 B)False

Question 5

Figure 8-10
​
  ​
-Refer to Figure 8-10. Suppose the government increases the size of the tax on this good from $3 per unit to $6 per unit. Will the tax revenue collected from the tax increase, decrease, or stay the same?

Accepted Answer

Total tax revenue will increas...

Question 6

Figure 8-2
The vertical distance between points C and D represents a tax in the market.
​  ​
​
​
​
-Refer to Figure 8-2. The amount of tax revenue received by the government is

Accepted Answer

A)  $2.
B)  $24.
C)  $20.
D)  $12.E) C) and D)
F) A) and B)

Question 7

Which of the following statements regarding a Laffer curve is the most plausible?

Accepted Answer

A)  Reducing a high tax rate is less likely to increase tax revenue than is reducing a low tax rate.
B)  Reducing a high tax rate is more likely to increase tax revenue than is reducing a low tax rate.
C)  Reducing a high tax rate will have the same effect on tax revenue as reducing a low tax rate.
D)  Reducing a tax rate can never increase tax revenue.E) None of the above
F) B) and C)

Question 8

The Laffer curve illustrates how taxes in markets with greater elasticities of demand compare to taxes in markets with smaller elasticities of supply.

Accepted Answer

A) True 
 B)False

Question 9

The more elastic the supply, the larger the deadweight loss from a tax, all else equal.

Accepted Answer

A) True 
 B)False

Question 10

The most important tax in the U.S. economy is the tax on corporations' profits.

Accepted Answer

A) True 
 B)False

Question 11

The optimal tax is difficult to determine because although revenues rise and fall as the size of the tax increases, deadweight loss continues to increase.

Accepted Answer

A) True 
 B)False

Question 12

Suppose the demand curve and the supply curve in a market are both linear. To begin, there was a $5 tax per unit, and the $5 tax resulted in a deadweight loss of $1,500. Now, the tax per unit is higher, with the higher tax resulting in a deadweight loss of $6,000. What is the amount of the new tax per unit?

Accepted Answer

The new tax per unit is $10. D...

Question 13

Figure 8-1 
-Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by J 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 D)
F) B) 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 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) C) and D)
F) A) and B)

Question 15

Taxes on labor tend to encourage the elderly to retire early.

Accepted Answer

A) True 
 B)False

Question 16

The Social Security tax is a labor tax.

Accepted Answer

A) True 
 B)False

Question 17

Taxes create deadweight losses.

Accepted Answer

A) True 
 B)False

Question 18

When a tax is levied on buyers, the

Accepted Answer

A)  supply curves shifts upward by the amount of the tax.
B)  tax creates a wedge between the price buyers pay and the price sellers receive.
C)  tax has no effect on the well-being of sellers.
D)  buyers bear the entire burden of the tax.E) B) and D)
F) A) and B)

Question 19

Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes:
 $$Q ^ { D } = 200 - ( P + T )$$ If T = 40, how much will be the deadweight loss from this tax?

Accepted Answer

The deadwe...

Question 20

Scenario 8-2
Roland mows Karla's lawn for $25. Roland's opportunity cost of mowing Karla's lawn is $20, and Karla's willingness to pay Roland to mow her lawn is $28.
-Refer to Scenario 8-2. Assume Roland is required to pay a tax of $3 each time he mows a lawn. Which of the following results is most likely?

Accepted Answer

A)  Karla now will decide to mow her own lawn, and Roland will decide it is no longer in his interest to mow Karla's lawn.
B)  Karla is willing to pay Roland to mow her lawn, but Roland will decline her offer.
C)  Roland is willing to mow Karla's lawn, but Karla will decide to mow her own lawn.
D)  Roland and Karla still can engage in a mutually-agreeable trade.E) B) and C)
F) All of the above

Exam 8: Applications: The Costs of Taxation

Correct Answer
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The new tax per unit is $10. D...
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Figure 8-10 -Refer to Figure 8-10. Suppose the government increases the size of the tax on this good from $3 per unit to $6 per unit. Will the tax revenue collected from the tax increase, decrease, or stay the same?

Correct Answer
verified
Total tax revenue will increas...
View Answer

Taxes create deadweight losses.

Correct Answer
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Which of the following statements regarding a Laffer curve is the most plausible?

Correct Answer
verified

Correct Answer
verified

When a tax is levied on buyers, the

Correct Answer
verified

Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes: $Q ^ { D } = 200 - ( P + T )$ If T = 40, how much will be the deadweight loss from this tax?

Correct Answer
verified
The deadwe...
View Answer

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

Correct Answer
verified

The Laffer curve illustrates how taxes in markets with greater elasticities of demand compare to taxes in markets with smaller elasticities of supply.

Correct Answer
verified

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.

Correct Answer
verified

Figure 8-2 The vertical distance between points C and D represents a tax in the market. -Refer to Figure 8-2. The amount of tax revenue received by the government is

Correct Answer
verified

Taxes on labor tend to encourage the elderly to retire early.

Correct Answer
verified

The most important tax in the U.S. economy is the tax on corporations' profits.

Correct Answer
verified

Figure 8-13 -Refer to Figure 8-13. As the size of the tax increases from $3 to $6 to $9, what happens to tax revenues?

Correct Answer
verified
When the tax is $3, tax revenue is $3 x ...
View Answer

The larger the deadweight loss from taxation, the larger the cost of government programs.

Correct Answer
verified

The more elastic the supply, the larger the deadweight loss from a tax, all else equal.

Correct Answer
verified

Figure 8-10 -Refer to Figure 8-10. Suppose the government places a $3 tax per unit on this good. How much is consumer surplus after the tax is imposed?

Correct Answer
verified
Consumer surplus is ...
View Answer

The optimal tax is difficult to determine because although revenues rise and fall as the size of the tax increases, deadweight loss continues to increase.

Correct Answer
verified

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

Correct Answer
verified

The Social Security tax is a labor tax.

Correct Answer
verified

Exam 8: Applications: The Costs of Taxation

Correct AnswerverifiedThe new tax per unit is $10. D...View AnswerShow Answer

Figure 8-10 ​ ​ -Refer to Figure 8-10. Suppose the government increases the size of the tax on this good from $3 per unit to $6 per unit. Will the tax revenue collected from the tax increase, decrease, or stay the same?

Correct AnswerverifiedTotal tax revenue will increas...View AnswerShow Answer

Taxes create deadweight losses.

Correct AnswerverifiedShow Answer

Which of the following statements regarding a Laffer curve is the most plausible?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a tax is levied on buyers, the

Correct AnswerverifiedShow Answer

Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes: QD=200−(P+T)Q ^ { D } = 200 - ( P + T )QD=200−(P+T) If T = 40, how much will be the deadweight loss from this tax?

Correct AnswerverifiedThe deadwe...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The Laffer curve illustrates how taxes in markets with greater elasticities of demand compare to taxes in markets with smaller elasticities of supply.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Figure 8-2 The vertical distance between points C and D represents a tax in the market. ​ ​ ​ ​ ​ -Refer to Figure 8-2. The amount of tax revenue received by the government is

Correct AnswerverifiedShow Answer

Taxes on labor tend to encourage the elderly to retire early.

Correct AnswerverifiedShow Answer

The most important tax in the U.S. economy is the tax on corporations' profits.

Correct AnswerverifiedShow Answer

Figure 8-13 -Refer to Figure 8-13. As the size of the tax increases from $3 to $6 to $9, what happens to tax revenues?

Correct AnswerverifiedWhen the tax is $3, tax revenue is $3 x ...View AnswerShow Answer

The larger the deadweight loss from taxation, the larger the cost of government programs.

Correct AnswerverifiedShow Answer

The more elastic the supply, the larger the deadweight loss from a tax, all else equal.

Correct AnswerverifiedShow Answer

Figure 8-10 ​ ​ -Refer to Figure 8-10. Suppose the government places a $3 tax per unit on this good. How much is consumer surplus after the tax is imposed?

Correct AnswerverifiedConsumer surplus is ...View AnswerShow Answer

The optimal tax is difficult to determine because although revenues rise and fall as the size of the tax increases, deadweight loss continues to increase.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Social Security tax is a labor tax.

Correct AnswerverifiedShow Answer

Correct Answer
verified
The new tax per unit is $10. D...
View Answer

Figure 8-10 -Refer to Figure 8-10. Suppose the government increases the size of the tax on this good from $3 per unit to $6 per unit. Will the tax revenue collected from the tax increase, decrease, or stay the same?

Correct Answer
verified
Total tax revenue will increas...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes: $Q ^ { D } = 200 - ( P + T )$ If T = 40, how much will be the deadweight loss from this tax?

Correct Answer
verified
The deadwe...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Figure 8-2 The vertical distance between points C and D represents a tax in the market. -Refer to Figure 8-2. The amount of tax revenue received by the government is

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
When the tax is $3, tax revenue is $3 x ...
View Answer

Correct Answer
verified

Correct Answer
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Figure 8-10 -Refer to Figure 8-10. Suppose the government places a $3 tax per unit on this good. How much is consumer surplus after the tax is imposed?

Correct Answer
verified
Consumer surplus is ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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