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Exam 8: Application: The Costs of Taxation

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Question 131

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Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. -Refer to Figure 8-8.The government collects tax revenue that is the area

A) L.
B) B+D.
C) C+F.
D) F+G+L.

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Question 132

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Figure 8-8 Suppose the government imposes a $10 per unit tax on a good. -Refer to Figure 8-8.After the tax goes into effect,producer surplus is the area

A) D+F+G+H+J.
B) D+F+G+H.
C) D+F+J.
D) J.

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Question 133

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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.Before the tax is imposed,the equilibrium price is

With linear demand and supply curves in a market,suppose a tax of $0.20 per unit on a good creates a deadweight loss of $40.If the tax is increased to $0.50 per unit,the deadweight loss from the new tax will be

Suppose the demand curve and the supply curve in a market are both linear.If a $2 tax per unit results in a deadweight loss of $200,how large would be the deadweight loss from a $3 tax per unit?

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 total surplus is

Scenario 8-1 Suppose the market demand and market supply curves are given by the equations: -Refer to Scenario 8-1.Suppose that a tax of T is placed on buyers so that the demand curve becomes: If T = 40,how much will be the deadweight loss from this tax?

Figure 8-9 The vertical distance between points A and C represent a tax in the market. -Refer to Figure 8-9.The imposition of the tax causes the quantity sold to

Andre walks Julia's dog once a day for $50 per week.Julia values this service at $60 per week,while the opportunity cost of Andre's time is $30 per week.The government places a tax of $35 per week on dog walkers.Before the tax,what is the total surplus?

Figure 8-3 -Refer to Figure 8-3.How much is total surplus at the market equililbrium?

Figure 8-11 -Refer to Figure 8-11.Suppose Q₁ = 4;Q₂ = 7;P₁ = $6;P₂ = $8;and P₃ = $10.Then the deadweight loss of the tax is

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,the equilibrium price and quantity are

Figure 8-9 The vertical distance between points A and C represent a tax in the market. -Refer to Figure 8-9.The equilibrium price and quantity before the imposition of the tax is

When a tax is levied on the sellers of a good,the

Taxes cause deadweight losses because they prevent buyers and sellers from realizing some of the gains from trade.

Figure 8-6 The vertical distance between points A and B represents a tax in the market. -Refer to Figure 8-6.When the tax is imposed in this market,buyers effectively pay what amount of the $10 tax?

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.

When a tax is imposed on buyers,consumer surplus and producer surplus both decrease.

The Social Security tax is a tax on

Suppose that instead of a supply-demand diagram,you are given the following information: Q_s = 100 + 3P Q_d = 400 - 2P From this information compute equilibrium price and quantity.Now suppose that a tax is placed on buyers so that Q_d = 400 - 2(P + T). If T = 15,solve for the new equilibrium price and quantity.(Note: P is the price received by sellers and P + T is the price paid by buyers. )Compare these answers for equilibrium price and quantity with your first answers.What does this show you?