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Exam 8: Application: The Costs of Taxation

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Question 71

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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. The amount of the tax on each unit of the good is

A) $6.
B) $8.
C) $10.
D) $12.

E) None of the above
F) All of the above

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Question 72

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When the government imposes taxes on buyers and sellers of a good, society loses some of the benefits of market efficiency.

A) True
B) False

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Question 73

Multiple Choice

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Taxes on labor encourage all of the following except

The benefit that government receives from a tax is measured by

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. The size of the tax is

Table 8-1 $\begin{array} { | c | c | } \hline \text { Marlet } & \text { Chareteristir } \\\hline \text { A } & \text { Denand is very elatic. } \\\hline B & \text { Denand is very inelastic. } \\\hline C & \text { Supply is vey elastic. } \\\hline D & \text { Supply is very inelatic. } \\\hline\end{array}$ -Refer to Table 8-1. Suppose the government is considering levying a tax in one or more of the markets described in the table. Which of the markets will maximize the deadweight loss(es) from the tax?

The size of the deadweight loss generated from a tax is affected by the

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

The more inelastic are demand and supply, the greater is the deadweight loss of a tax.

When a tax is levied on a good, the buyers and sellers of the good share the burden,

Figure 8-4 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-4. The amount of deadweight loss as a result of the tax is

Suppose that a university charges students a $100 "tax" to register for business classes. The next year the university raises the "tax" to $150. The deadweight loss from the "tax" triples.

Figure 8-11 -Refer to Figure 8-11. The price labeled as P₁ on the vertical axis represents the price

In which of the following cases is it most likely that an increase in the size of a tax will decrease tax revenue?

If the size of a tax increases, tax revenue

Figure 8-16 -Refer to Figure 8-16. Suppose the government imposes a $1 tax in each of the four markets represented by supply curves S1, S2, S3, and S4. The deadweight will be the smallest in the market represented by

Figure 8-1 -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

Figure 8-2 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-2. The per-unit burden of the tax on sellers is

Suppose a tax of $4 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 2,000 units to 1,700 units. The tax decreases consumer surplus by $3,000 and decreases producer surplus by $4,400. The deadweight loss of the tax is

Figure 8-4 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-4. The tax results in a loss of consumer surplus that amounts to