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Exam 8: Application: the Costs of Taxation

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Question 91

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

A) the size of the cigarette market is reduced.
B) the price paid by buyers of cigarettes decreases.
C) the demand for cigarettes decreases.
D) there is a movement downward and to the right along the demand curve for cigarettes.

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

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Question 92

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Figure 8-3 -Refer to Figure 8-3.The price that sellers effectively receive after the tax is imposed is

A) $24.
B) $14.
C) $10.
D) $8.

E) A) and B)
F) A) and D)

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Question 93

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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

Suppose a tax of $3 per unit is imposed on a good.The supply curve and the demand curve are straight lines.The tax decreases consumer surplus by $3,900 and it decreases producer surplus by $3,000.The tax generates tax revenue of $6,000.From this information it follows that the tax decreased the equilibrium quantity of the good

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

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.

For the purpose of analyzing the gains and losses from a tax on a good,we use tax revenue as a direct measure of

Quantitatively,which of the following taxes are the most important taxes in the U.S.economy?

A $2.00 tax placed on the sellers of potting soil,for every bag of potting soil they sell,will shift the supply curve

Figure 8-3 -Refer to Figure 8-3.The amount of the tax on each unit of the good is

Buyers of a product will bear the larger part of the tax burden,and sellers will bear a smaller part of the tax burden,when

Figure 8-7 The graph below represents a $10 per unit tax on a good. On the graph, Q represents quantity and P represents price. -Refer to Figure 8-7.The government collects tax revenue that is represented by the area

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

A tax on a good causes the size of the market to increase.

When a tax is imposed,the loss of consumer surplus and producer surplus as a result of the tax exceeds the tax revenue collected by the government.

The benefit that government receives from a tax is measured by

Deadweight loss measures the

If the size of a tax increases,tax revenue

Figure 8-7 The graph below represents a $10 per unit tax on a good. On the graph, Q represents quantity and P represents price. -Refer to Figure 8-7.After the tax goes into effect,producer surplus is the area

Figure 8-2 -Refer to Figure 8-2.The price that buyers effectively pay after the tax is imposed is