Oya Cesur Demir



ch-8Multiple ChoiceIdentify the choice that best completes the statement or answers the question.____1.To measure the gains and losses from a tax on a good, economists use the tools of a.macroeconomics.b.welfare economics.c.international-trade theory.d.circular-flow analysis.____2.A tax levied on the sellers of a good shifts thea.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).____3.A tax levied on the buyers of a good shifts thea.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).____4.Suppose a tax is imposed on the sellers 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.____5.The decrease in total surplus that results from a market distortion, such as a tax, is called aa.wedge loss.b.revenue loss.c.deadweight loss.d.consumer surplus loss.____6.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.____7.Deadweight loss is thea.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.Figure 8-2The vertical distance between points A and B represents a tax in the market.____8.Refer to Figure 8-2. The imposition of the tax causes the quantity sold to a.increase by 1 unit.b.decrease by 1 unit.c.increase by 2 units.d.decrease by 2 units.____9.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.____10.Refer to Figure 8-2. The imposition of the tax causes the price received by sellers to a.decrease by $2.b.increase by $3.c.decrease by $4.d.increase by $5.____11.Refer to Figure 8-2. The amount of the tax on each unit of the good isa.$1.b.$4.c.$5.d.$9.____12.Refer to Figure 8-2. The per-unit burden of the tax on buyers isa.$2.b.$3.c.$4.d.$5.____13.Refer to Figure 8-2. The per-unit burden of the tax on sellers isa.$2.b.$3.c.$4.d.$5.____14.Refer to Figure 8-2. The amount of tax revenue received by the government isa.$2.50.b.$4.c.$5.d.$9.____15.Refer to Figure 8-2. The amount of deadweight loss as a result of the tax isa.$2.50.b.$5.c.$7.50.d.$10.____16.Refer to Figure 8-2. The loss of consumer surplus as a result of the tax isa.$1.50.b.$3.c.$4.50.d.$6.____17.Refer to Figure 8-2. The loss of producer surplus as a result of the tax isa.$1.b.$2.c.$3.d.$4.____18.Refer to Figure 8-2. Consumer surplus without the tax isa.$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.____19.Refer to Figure 8-2. Producer surplus without the tax isa.$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.____20.Refer to Figure 8-2. Total surplus without the tax isa.$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.Figure 8-5Suppose that the government imposes a tax of P3 - P1.____21.Refer to Figure 8-5. The equilibrium price before the tax is imposed isa.P1.b.P2.c.P3.d.P4.____22.Refer to Figure 8-5. The price that buyers effectively pay after the tax is imposed isa.P1.b.P2.c.P3.d.P4.____23.Refer to Figure 8-5. The price that sellers effectively receive after the tax is imposed isa.P1.b.P2.c.P3.d.P4.____24.Refer to Figure 8-5. The tax is levied ona.buyers only.b.sellers only. c.both buyers and sellers.d.This is impossible to determine from the figure.____25.Refer to Figure 8-5. Consumer surplus before the tax was levied is represented by areaa.A.b.A+B+C.c.D+H+F.d.F.____26.Refer to Figure 8-5. Producer surplus before the tax was levied is represented by areaa.A.b.A+B+C.c.D+H+F.d.F.____27.Refer to Figure 8-5. After the tax is levied, consumer surplus is represented by areaa.A.b.A+B+C.c.D+H+F.d.F.____28.Refer to Figure 8-5. After the tax is levied, producer surplus is represented by areaa.A.b.A+B+C.c.D+H+F.d.F.____29.Refer to Figure 8-5. The tax causes a reduction in consumer surplus that is represented by areaa.A.b.B+C.c.C+H.d.F.____30.Refer to Figure 8-5. The tax causes a reduction in producer surplus that is represented by areaa.A.b.C+H.c.D+H.d.F.____31.Refer to Figure 8-5. The benefit to the government is measured by a.tax revenue and is represented by area A+B.b.tax revenue and is represented by area B+D.c.the net gain in total surplus and is represented by area B+D.d.the net gain in total surplus and is represented by area C+H.____32.Refer to Figure 8-5. The total surplus with the tax is represented by areaa.C+H.b.A+B+C.c.D+H+F.d.A+B+D+F.____33.Refer to Figure 8-5. The loss in total welfare that results from the tax is represented by areaa.A+B+D+F.b.A+B+C.c.D+H+F.d.C+H.Figure 8-7The vertical distance between points A and B represents a tax in the market.____34.Refer to Figure 8-7. Before the tax is imposed, the equilibrium price is a.$16, and the equilibrium quantity is 15.b.$12, and the equilibrium quantity is 15.c.$12, and the equilibrium quantity is 25.d.$8, and the equilibrium quantity is 15.____35.Refer to Figure 8-7. As a result of the tax, buyers effectively pay a.$16 for each unit of the good, and sellers effectively receive $12 for each unit of the good.b.$16 for each unit of the good, and sellers effectively receive $8 for each unit of the good.c.$12 for each unit of the good, and sellers effectively receive $8 for each unit of the good.d.$14 for each unit of the good, and sellers effectively receive $10 for each unit of the good.____36.The size of the deadweight loss generated from a tax is affected by the a.elasticities of both supply and demand.b.elasticity of demand only.c.elasticity of supply only.d.total revenue collected by the government.Figure 8-13____37.Refer to Figure 8-13. Panel (a) and Panel (b) each illustrate a $4 tax placed on a market. In comparison to Panel (a), Panel (b) illustrates which of the following statements? a.When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic.b.When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic.c.When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic.d.When supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic.Figure 8-14____38.Refer to Figure 8-14. Panel (a) and Panel (b) each illustrate a $2 tax placed on a market. In comparison to Panel (b), Panel (a) illustrates which of the following statements? a.When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic.b.When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic.c.When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic.d.When supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic.____39.Refer to Figure 8-14. Panel (a) and Panel (b) each illustrate a $2 tax placed on a market. In comparison to Panel (a), Panel (b) illustrates which of the following statements? a.When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic.b.When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic.c.When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic.d.When supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic.Figure 8-19. The figure represents the relationship between the size of a tax and the tax revenue raised by that tax.____40.Refer to Figure 8-19. The curve that is shown on the figure is called thea.deadweight-loss curve.b.tax-incidence curve.c.Laffer curve.d.Lorenz curve.____41.Refer to Figure 8-19. If the economy is at point A on the curve, then a small increase in the tax rate willa.increase the deadweight loss of the tax and increase tax revenue.b.increase the deadweight loss of the tax and decrease tax revenue.c.decrease the deadweight loss of the tax and increase tax revenue.d.decrease the deadweight loss of the tax and decrease tax revenue.____42.Refer to Figure 8-19. If the economy is at point A on the curve, then a decrease in the tax rate willa.increase the deadweight loss of the tax and increase tax revenue.b.increase the deadweight loss of the tax and decrease tax revenue.c.decrease the deadweight loss of the tax and increase tax revenue.d.decrease the deadweight loss of the tax and decrease tax revenue.____43.Refer to Figure 8-19. If the economy is at point B on the curve, then an increase in the tax rate willa.increase the deadweight loss of the tax and increase tax revenue.b.increase the deadweight loss of the tax and decrease tax revenue.c.decrease the deadweight loss of the tax and increase tax revenue.d.decrease the deadweight loss of the tax and decrease tax revenue.____44.Refer to Figure 8-19. If the economy is at point B on the curve, then a small decrease in the tax rate willa.increase the deadweight loss of the tax and increase tax revenue.b.increase the deadweight loss of the tax and decrease tax revenue.c.decrease the deadweight loss of the tax and increase tax revenue.d.decrease the deadweight loss of the tax and decrease tax revenue.____45.When the government imposes taxes on buyers or sellers of a good, society a.loses some of the benefits of market efficiency.b.gains efficiency but loses equality.c.is better off because the government’s tax revenues exceed the deadweight loss.d.moves from an elastic supply curve to an inelastic supply curve.ch-8Answer SectionMULTIPLE CHOICE1.ANS:BPTS:1DIF:1REF:8-1NAT:AnalyticLOC:Supply and demandTOP:WelfareMSC:Interpretive2.ANS:APTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:TaxesMSC:Interpretive3.ANS:CPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:TaxesMSC:Interpretive4.ANS:DPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Tax incidenceMSC:Interpretive5.ANS:CPTS:1DIF:1REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Deadweight lossMSC:Definitional6.ANS:DPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Deadweight lossMSC:Interpretive7.ANS:APTS:1DIF:1REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Deadweight lossMSC:Definitional8.ANS:BPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:TaxesMSC:Applicative9.ANS:BPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:TaxesMSC:Applicative10.ANS:APTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:TaxesMSC:Applicative11.ANS:CPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:TaxesMSC:Applicative12.ANS:BPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Tax incidenceMSC:Applicative13.ANS:APTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Tax incidenceMSC:Applicative14.ANS:CPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Tax revenueMSC:Applicative15.ANS:APTS:1DIF:3REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Deadweight lossMSC:Applicative16.ANS:CPTS:1DIF:3REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Consumer surplusMSC:Applicative17.ANS:CPTS:1DIF:3REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Producer surplusMSC:Applicative18.ANS:APTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Consumer surplusMSC:Applicative19.ANS:APTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Producer surplusMSC:Applicative20.ANS:BPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Total surplusMSC:Applicative21.ANS:BPTS:1DIF:1REF:8-1NAT:AnalyticLOC:Supply and demandTOP:TaxesMSC:Interpretive22.ANS:CPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:TaxesMSC:Applicative23.ANS:APTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:TaxesMSC:Applicative24.ANS:DPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Tax incidenceMSC:Interpretive25.ANS:BPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Consumer surplusMSC:Interpretive26.ANS:CPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Producer surplusMSC:Interpretive27.ANS:APTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Consumer surplusMSC:Applicative28.ANS:DPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Producer surplusMSC:Applicative29.ANS:BPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Consumer surplusMSC:Applicative30.ANS:CPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Producer surplusMSC:Applicative31.ANS:BPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Tax revenueMSC:Applicative32.ANS:DPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Total surplusMSC:Applicative33.ANS:DPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:Deadweight lossMSC:Applicative34.ANS:CPTS:1DIF:1REF:8-1NAT:AnalyticLOC:Supply and demandTOP:TaxesMSC:Interpretive35.ANS:BPTS:1DIF:2REF:8-1NAT:AnalyticLOC:Supply and demandTOP:TaxesMSC:Applicative36.ANS:APTS:1DIF:2REF:8-2NAT:AnalyticLOC:ElasticityTOP:Elasticity | Tax | Deadweight lossMSC:Interpretive37.ANS:APTS:1DIF:2REF:8-2NAT:AnalyticLOC:ElasticityTOP:Deadweight lossMSC:Applicative38.ANS:CPTS:1DIF:2REF:8-2NAT:AnalyticLOC:ElasticityTOP:Deadweight lossMSC:Applicative39.ANS:DPTS:1DIF:2REF:8-2NAT:AnalyticLOC:ElasticityTOP:Deadweight lossMSC:Applicative40.ANS:CPTS:1DIF:1REF:8-3NAT:AnalyticLOC:The role of governmentTOP:Deadweight loss | Laffer curveMSC:Definitional41.ANS:APTS:1DIF:2REF:8-3NAT:AnalyticLOC:The role of governmentTOP:Deadweight loss | Laffer curveMSC:Interpretive42.ANS:DPTS:1DIF:2REF:8-3NAT:AnalyticLOC:The role of governmentTOP:Deadweight loss | Laffer curveMSC:Interpretive43.ANS:BPTS:1DIF:2REF:8-3NAT:AnalyticLOC:The role of governmentTOP:Deadweight loss | Laffer curveMSC:Interpretive44.ANS:CPTS:1DIF:2REF:8-3NAT:AnalyticLOC:The role of governmentTOP:Deadweight loss | Laffer curveMSC:Interpretive45.ANS:APTS:1DIF:1REF:8-4NAT:AnalyticLOC:ElasticityTOP:EfficiencyMSC:Interpretive ................
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