【国际经济学专题考试试卷八】the Costs of Taxation

Chapter 8Application: the Costs of TaxationTRUE/FALSE1. Total surplus is always equal to the sum of consumer surplus and producer surplus.ANS: F DIF: 2 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Total surplusMSC: Interpretive2. Total surplus in a market does not change when the government imposes a tax on that market because the lossof consumer surplus and producer surplus is equal to the gain of government revenue.ANS: F DIF: 2 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Total surplusMSC: Interpretive3. When a tax is imposed on buyers, consumer surplus and producer surplus both decrease.ANS: T DIF: 2 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Consumer surplus | Producer surplusMSC: Interpretive4. When a tax is imposed on buyers, consumer surplus decreases but producer surplus increases.ANS: F DIF: 2 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Consumer surplus | Producer surplusMSC: Interpretive5. When a tax is imposed on sellers, producer surplus decreases but consumer surplus increases.ANS: F DIF: 2 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Consumer surplus | Producer surplusMSC: Interpretive6. When a tax is imposed on sellers, consumer surplus and producer surplus both decrease.ANS: T DIF: 2 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Consumer surplus | Producer surplusMSC: Interpretive7. Taxes affect market participants by increasing the price paid by the buyer and received by the seller.ANS: F DIF: 1 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Taxes MSC: Applicative8. Taxes affect market participants by increasing the price paid by the buyer and decreasing the price received bythe seller.ANS: T DIF: 1 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Taxes MSC: Applicative9. A tax raises the price received by sellers and lowers the price paid by buyers.ANS: F DIF: 1 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Efficiency MSC: Interpretive10. Normally, both buyers and sellers of a good become worse off when the good is taxed.ANS: T DIF: 2 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Welfare MSC: Interpretive11. When a good is taxed, the tax revenue collected by the government equals the decrease in the welfare ofbuyers and sellers caused by the tax.ANS: F DIF: 2 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Welfare | Tax revenueMSC: Interpretive529530 Chapter 8 /Application: the Costs of Taxation12. A tax places a wedge between the price buyers pay and the price sellers receive.ANS: T DIF: 1 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Efficiency MSC: Interpretive13. A tax on a good causes the size of the market to increase.ANS: F DIF: 1 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Efficiency MSC: Interpretive14. A tax on a good causes the size of the market to shrink.ANS: T DIF: 1 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Efficiency MSC: Interpretive15. When a tax is imposed, the loss of consumer surplus and producer surplus as a result of the tax exceeds the taxrevenue collected by the government.ANS: T DIF: 2 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Welfare MSC: Interpretive16. Economists use the government’s tax revenue to measure the public benefit from a tax.ANS: T DIF: 2 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Welfare MSC: Interpretive17. Because taxes distort incentives, they cause markets to allocate resources inefficiently.ANS: T DIF: 2 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Efficiency MSC: Interpretive18. Taxes cause deadweight losses because they prevent buyers and sellers from realizing some of the gains fromtrade.ANS: T DIF: 2 REF: 8-1 NAT: AnalyticLOC: Supply and demand TOP: Deadweight lossMSC: Interpretive19. As the price elasticities of supply and demand increase, the deadweight loss from a tax increases.ANS: T DIF: 2 REF: 8-2 NAT: AnalyticLOC: Elasticity TOP: Elasticity | Deadweight loss MSC: Applicative20. The greater the elasticity of demand, the smaller the deadweight loss of a tax.ANS: F DIF: 2 REF: 8-2 NAT: AnalyticLOC: Elasticity TOP: Elasticity | Deadweight loss MSC: Interpretive21. The more inelastic are demand and supply, the greater is the deadweight loss of a tax.ANS: F DIF: 2 REF: 8-2 NAT: AnalyticLOC: Elasticity TOP: Elasticity | Deadweight loss MSC: Applicative22. The elasticities of the supply and demand curves in the market for cigarettes affect how much a tax distortsthat market.ANS: T DIF: 2 REF: 8-2 NAT: AnalyticLOC: Elasticity TOP: Elasticity | Deadweight loss MSC: Interpretive23. If a tax did not induce buyers or sellers to change their behavior, it would not cause a deadweight loss. ANS: T DIF: 2 REF: 8-2 NAT: AnalyticLOC: Supply and demand TOP: Deadweight lossMSC: Interpretive24. The most important tax in the U.S. economy is the tax on corporations’ profits.ANS: F DIF: 1 REF: 8-2 NAT: AnalyticLOC: Supply and demand TOP: Labor MSC: Definitional25. The Social Security tax, and to a large extent, the federal income tax, are labor taxes.ANS: T DIF: 1 REF: 8-2 NAT: AnalyticLOC: Supply and demand TOP: Labor MSC: InterpretiveChapter 8 /Application: the Costs of Taxation 531 26. Taxes on labor tend to increase the number of hours that people choose to work.ANS: F DIF: 1 REF: 8-2 NAT: AnalyticLOC: Supply and demand TOP: Labor MSC: Interpretive27. Taxes on labor tend to encourage the elderly to retire early.ANS: T DIF: 1 REF: 8-2 NAT: AnalyticLOC: Supply and demand TOP: Labor MSC: Interpretive28. Taxes on labor tend to encourage second earners to stay at home rather than work in the labor force.ANS: T DIF: 1 REF: 8-2 NAT: AnalyticLOC: Supply and demand TOP: Labor MSC: Interpretive29. Economists disagree on whether labor taxes have a small or large deadweight loss.ANS: T DIF: 1 REF: 8-2 NAT: AnalyticLOC: Supply and demand TOP: Labor | Deadweight lossMSC: Definitional30. The demand for bread is less elastic than the demand for donuts; hence, a tax on bread will create a largerdeadweight loss than will the same tax on donuts, other things equal.ANS: F DIF: 2 REF: 8-2 NAT: AnalyticLOC: Elasticity TOP: Elasticity | Deadweight loss MSC: Applicative31. The larger the deadweight loss from taxation, the larger the cost of government programs.ANS: T DIF: 2 REF: 8-2 NAT: AnalyticLOC: Supply and demand TOP: Deadweight lossMSC: Interpretive32. A tax on insulin is likely to cause a very large deadweight loss to society.ANS: F DIF: 2 REF: 8-2 NAT: AnalyticLOC: Elasticity TOP: Deadweight loss | Elasticity MSC: Applicative33. The deadweight loss of a tax rises even more rapidly than the size of the tax.ANS: T DIF: 2 REF: 8-3 NAT: AnalyticLOC: Supply and demand TOP: Deadweight lossMSC: Interpretive34. As the size of a tax increases, the government's tax revenue rises, then falls.ANS: T DIF: 2 REF: 8-3 NAT: AnalyticLOC: Supply and demand TOP: Laffer curve MSC: Interpretive35. Tax revenues increase in direct proportion to increases in the size of the tax.ANS: F DIF: 2 REF: 8-3 NAT: AnalyticLOC: Supply and demand TOP: Tax revenue MSC: Interpretive36. If the size of a tax doubles, the deadweight loss doubles.ANS: F DIF: 3 REF: 8-3 NAT: AnalyticLOC: Supply and demand TOP: Deadweight lossMSC: Applicative37. If the size of a tax triples, the deadweight loss increases by a factor of six.ANS: F DIF: 3 REF: 8-3 NAT: AnalyticLOC: Supply and demand TOP: Deadweight lossMSC: Applicative38. A tax on unimproved land falls entirely on landowners because the supply of land is perfectly inelastic. ANS: T DIF: 2 REF: 8-3 NAT: AnalyticLOC: Supply and demand TOP: Land tax MSC: Interpretive39. Because the supply of land is perfectly elastic, the deadweight loss of a tax on land is very large.ANS: F DIF: 2 REF: 8-3 NAT: AnalyticLOC: Elasticity TOP: Land tax | Deadweight loss MSC: Interpretive532 Chapter 8 /Application: the Costs of Taxation40. Economist Arthur Laffer made the argument that tax rates in the United States were so high that reducing therates would increase tax revenue.ANS: T DIF: 2 REF: 8-3 NAT: AnalyticLOC: Supply and demand TOP: Laffer curve MSC: Definitional41. The Laffer curve is the curve showing how tax revenue varies as the size of the tax varies.ANS: T DIF: 2 REF: 8-3 NAT: AnalyticLOC: Supply and demand TOP: Laffer curve MSC: Definitional42. The result of the large tax cuts in the first Reagan Administration demonstrated very convincingly that ArthurLaffer was correct when he asserted that cuts in tax rates would increase tax revenue.ANS: F DIF: 2 REF: 8-3 NAT: AnalyticLOC: Supply and demand TOP: Laffer curve MSC: Interpretive43. The idea that tax cuts would increase the quantity of labor supplied, thus increasing tax revenue, became knowas supply-side economics.ANS: T DIF: 2 REF: 8-3 NAT: AnalyticLOC: Supply and demand TOP: Supply-side economicsMSC: Definitional44. The Laffer curve illustrates how taxes in markets with greater elasticities of demand compare to taxes inmarkets with smaller elasticities of supply.ANS: F DIF: 2 REF: 8-3 NAT: AnalyticLOC: Supply and demand TOP: Laffer curve MSC: Definitional45. The more elastic are supply and demand in a market, the greater are the distortions caused by a tax on thatmarket, and the more likely it is that a tax cut in that market will raise tax revenue.ANS: T DIF: 3 REF: 8-3 NAT: AnalyticLOC: Elasticity TOP: Elasticity | Deadweight loss MSC: Applicative46. When the government imposes taxes on buyers and sellers of a good, society loses some of the benefits ofmarket efficiency.ANS: T DIF: 1 REF: 8-4 NAT: AnalyticLOC: Supply and demand TOP: Efficiency MSC: InterpretiveChapter 8 /Application: the Costs of Taxation 533SHORT ANSWER 1.Suppose the government levies a tax of the vertical distance from point A to point B. Using the graph shown,determine the value of each of the following: a. equilibrium price before the tax b. consumer surplus before the tax c. producer surplus before the tax d. total surplus before the tax e. consumer surplus after the tax f. producer surplus after the taxg. total tax revenue to the governmenth. total surplus (consumer surplus+producer surplus+tax revenue) after the tax i. deadweight loss1002003004005006007008009001000246810121416182022ANS:a. $10b. $3,600c. $2,400d. $6,000e. $900f. $600g. $3,000h. $4,500i.$1,500DIF: 3REF: 8-1NAT: AnalyticLOC: Supply and demandTOP: Welfare MSC: Applicative2.John has been in the habit of mowing Willa's lawn each week for $20. John's opportunity cost is $15, and Willa would be willing to pay $25 to have her lawn mowed. What is the maximum tax the government can impose on lawn mowing without discouraging John and Willa from continuing their mutually beneficial arrangement?ANS:If the tax is less than $10, there will exist a price at which both John and Willa will still benefit from thelawn-mowing arrangement. If the tax is $10, a price can be set which will leave John and Willa neither better off nor worse off from the lawn-mowing arrangement. If the tax is greater than $10, all possible prices will leave at least one of the parties worse off from the lawn-mowing arrangement.DIF: 2REF: 8-1NAT: AnalyticLOC: Supply and demandTOP: Efficiency MSC: Applicative534 Chapter 8 /Application: the Costs of Taxation 3.Use the following graph shown to fill in the table that follows.DemandSupplyQ1Q2P1P2P3ABDFC GP4QuantityPriceDIF: 2REF: 8-1NAT: AnalyticLOC: Supply and demandTOP: Welfare MSC: Applicative4.Suppose that instead of a supply-demand diagram, you are given the following information:Q s = 100 + 3P Q d = 400 - 2PFrom this information compute equilibrium price and quantity. Now suppose that a tax is placed on buyers so that Q d = 400 - (2P + 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?ANS:Prior to the tax, the equilibrium price would be $60 and the equilibrium quantity would be 280. After the tax is imposed, P , the price received by sellers would be $57. The price paid by buyers would be $72. The quantity sold would be 271. The new answer shows three obvious facts. First, buyers pay more with a tax. Second, sellers receive less with a tax. Third, the size of the market shrinks when a tax is imposed on a product.DIF: 3 REF: 8-1NAT: AnalyticLOC: Supply and demandTOP: Taxes MSC: AnalyticalChapter 8 /Application: the Costs of Taxation 535 5. Using demand and supply diagrams, show the difference in deadweight loss between (a) a market withinelastic demand and supply and (b) a market with elastic demand and supply.ANS:DIF: 2 REF: 8-2 NAT: Analytic LOC: ElasticityTOP: Deadweight loss | Elasticity MSC: Applicative536 Chapter 8 /Application: the Costs of Taxation6. Illustrate on three demand-and-supply graphs how the size of a tax (small, medium and large) can alter totalrevenue and deadweight loss.ANS:DIF: 2 REF: 8-3 NAT: Analytic LOC: Supply and demandTOP: Deadweight loss MSC: ApplicativeSec00 - Application: The Costs of TaxationMULTIPLE CHOICE1. In 1776, the American Revolution was sparked by anger overa.the extravagant lifestyle of British royalty.b.the crimes of British soldiers stationed in the American colonies.c.British taxes imposed on the American colonies.d.the failure of the British to protect American colonists from attack by hostile Native Americans. ANS: C DIF: 1 REF: 8-0NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: DefinitionalChapter 8 /Application: the Costs of Taxation 5372. Anger over British taxes played a significant role in bringing about thea.election of John Adams as the second American president.b.American Revolution.c.War of 1812.d.“no new taxes” clause in the U.S. Constitution.ANS: B DIF: 1 REF: 8-0NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Definitional3. Who once said that taxes are the price we pay for a civilized society?a.Aristotleb.George Washingtonc.Oliver Wendell Holmes, Jr.d.Ronald ReaganANS: C DIF: 1 REF: 8-0NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Definitional4. Who once said that taxes are the price we pay for a civilized society?ton Friedmanb.Theodore Rooseveltc.Arthur Lafferd.Oliver Wendell Holmes, Jr.ANS: D DIF: 1 REF: 8-0NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Definitional5. To fully understand how taxes affect economic well-being, we musta.assume that economic well-being is not affected if all tax revenue is spent on goods and services forthe people who are being taxed.pare the taxes raised in the United States with those raised in other countries, especially France.pare the reduced welfare of buyers and sellers to the amount of revenue the government raises.d.take into account the fact that almost all taxes reduce the welfare of buyers, increase the welfare ofsellers, and raise revenue for the government.ANS: C DIF: 2 REF: 8-0NAT: Analytic LOC: Supply and demand TOP: Taxes | Economic welfare MSC: Interpretive6. To fully understand how taxes affect economic well-being, we must compare thea.benefit to buyers with the loss to sellers.b.price paid by buyers to the price received by sellers.c.profits earned by firms to the losses incurred by consumers.d.decrease in total surplus to the increase in revenue raised by the government.ANS: D DIF: 2 REF: 8-0NAT: Analytic LOC: Supply and demand TOP: Taxes | Economic welfare MSC: Interpretive7. To fully understand how taxes affect economic well-being, we must compare thea.consumer surplus to the producer surplus.b.price paid by buyers to the price received by sellers.c.reduced welfare of buyers and sellers to the revenue raised by the government.d.consumer surplus to the deadweight loss.ANS: C DIF: 2 REF: 8-0NAT: Analytic LOC: Supply and demand TOP: Taxes | Economic welfare MSC: Interpretive538 Chapter 8 /Application: the Costs of TaxationSec01 - Application: The Costs of Taxation - The Deadweight Loss of Taxation MULTIPLE CHOICE1. When a tax is levied on a good, the buyers and sellers of the good share the burden,a.provided the tax is levied on the sellers.b.provided the tax is levied on the buyers.c.provided a portion of the tax is levied on the buyers, with the remaining portion levied on thesellers.d.regardless of how the tax is levied.ANS: D DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: Tax burdenMSC: Interpretive2. A tax on a gooda.raises the price that buyers effectively pay and raises the price that sellers effectively receive.b.raises the price that buyers effectively pay and lowers the price that sellers effectively receive.c.lowers the price that buyers effectively pay and raises the price that sellers effectively receive.d.lowers the price that buyers effectively pay and lowers the price that sellers effectively receive. ANS: B DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Interpretive3. When a tax is placed on a product, the price paid by buyersa.rises, and the price received by sellers rises.b.rises, and the price received by sellers falls.c.falls, and the price received by sellers rises.d.falls, and the price received by sellers falls.ANS: B DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Interpretive4. A tax affectsa.buyers only.b.sellers only.c.buyers and sellers only.d.buyers, sellers, and the government.ANS: D DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: Tax incidenceMSC: Interpretive5. The government’s benefit from a tax can be measured bya.consumer surplus.b.producer surplus.c.tax revenue.d.All of the above are correct.ANS: C DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: Tax revenueMSC: Interpretive6. What happens to the total surplus in a market when the government imposes a tax?a.Total surplus increases by the amount of the tax.b.Total surplus increases but by less than the amount of the tax.c.Total surplus decreases.d.Total surplus is unaffected by the tax.ANS: C DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: Total surplusMSC: Applicative7. When a good is taxed,a.both buyers and sellers of the good are made worse off.b.only buyers are made worse off, because they ultimately bear the burden of the tax.c.only sellers are made worse off, because they ultimately bear the burden of the tax.d.neither buyers nor sellers are made worse off, since tax revenue is used to provide goods andservices that would otherwise not be provided in a market economy.ANS: A DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: Tax burdenMSC: Interpretive8. To measure the gains and losses from a tax on a good, economists use the tools ofa.macroeconomics.b.welfare economics.c.international-trade theory.d.circular-flow analysis.ANS: B DIF: 1 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: WelfareMSC: Interpretive9. When a tax is imposed on a good, thea.supply curve for the good always shifts.b.demand curve for the good always shifts.c.amount of the good that buyers are willing to buy at each price always remains unchanged.d.equilibrium quantity of the good always decreases.ANS: D DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Interpretive10. 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).ANS: A DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Interpretive11. 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).ANS: C DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Interpretive12. If a tax shifts the supply curve upward (or to the left), we can infer that the tax was levied ona.buyers of the good.b.sellers of the good.c.both buyers and sellers of the good.d.We cannot infer anything because the shift described is not consistent with a tax.ANS: B DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Interpretive13. If a tax shifts the supply curve downward (or to the right), we can infer that the tax was levied ona.buyers of the good.b.sellers of the good.c.both buyers and sellers of the good.d.We cannot infer anything because the shift described is not consistent with a tax.ANS: D DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Interpretive14. If a tax shifts the demand curve downward (or to the left), we can infer that the tax was levied ona.buyers of the good.b.sellers of the good.c.both buyers and sellers of the good.d.We cannot infer anything because the shift described is not consistent with a tax.ANS: A DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Interpretive15. If a tax shifts the demand curve upward (or to the right), we can infer that the tax was levied ona.buyers of the good.b.sellers of the good.c.both buyers and sellers of the good.d.We cannot infer anything because the shift described is not consistent with a tax.ANS: D DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Interpretive16. When a tax is imposed on the buyers of a good, the demand curve shiftsa.downward by the amount of the tax.b.upward by the amount of the tax.c.downward by less than the amount of the tax.d.upward by more than the amount of the tax.ANS: A DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Interpretive17. When a tax is imposed on the sellers of a good, thea.demand curve shifts downward by less than the amount of the tax.b.demand curve shifts downward by the amount of the tax.c.supply curve shifts upward by less than the amount of the tax.d.supply curve shifts upward by the amount of the tax.ANS: D DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Interpretive18. A tax placed on buyers of tires shifts thea.demand curve for tires downward, decreasing the price received by sellers of tires and causing thequantity of tires to increase.b.demand curve for tires downward, decreasing the price received by sellers of tires and causing thequantity of tires to decrease.c.supply curve for tires upward, decreasing the effective price paid by buyers of tires and causing thequantity of tires to increase.d.supply curve for tires upward, increasing the effective price paid by buyers of tires and causing thequantity of tires to decrease.ANS: B DIF: 3 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Applicative19. Suppose a tax is imposed on the buyers of fast-food French fries. The burden of the tax willa.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. ANS: D DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: Tax incidenceMSC: Interpretive20. It does not matter whether a tax is levied on the buyers or the sellers of a good becausea.sellers always bear the full burden of the tax.b.buyers always bear the full burden of the tax.c.buyers and sellers will share the burden of the tax.d.None of the above is correct; the incidence of the tax does depend on whether the buyers or thesellers are required to pay the tax.ANS: C DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: Tax incidenceMSC: Interpretive21. When alcohol is taxed and sellers of alcohol are required to pay the tax to the government,a.the quantity of alcohol bought and sold in the market is reduced.b.the price paid by buyers of alcohol decreases.c.the demand for alcohol decreases.d.there is a movement downward and to the right along the demand curve for alcohol.ANS: A DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: Tax incidenceMSC: Interpretive22. One result of a tax, regardless of whether the tax is placed on the buyers or the sellers, is that thea.size of the market is unchanged.b.price the seller effectively receives is higher.c.supply curve for the good shifts upward by the amount of the tax.d.tax reduces the welfare of both buyers and sellers.ANS: D DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: Taxes | Welfare MSC: Interpretive23. When a tax is placed on the buyers of a product, a result is that buyers effectively paya.less than before the tax, and sellers effectively receive less than before the tax.b.less than before the tax, and sellers effectively receive more than before the tax.c.more than before the tax, and sellers effectively receive less than before the tax.d.more than before the tax, and sellers effectively receive more than before the tax.ANS: C DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Interpretive24. When a tax is levied on a good,a.neither buyers nor sellers are made worse off.b.only sellers are made worse off.c.only buyers are made worse off.d.both buyers and sellers are made worse off.ANS: D DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: Taxes | Welfare MSC: Interpretive25. When a tax is levied on the buyers of a good, thea.supply curve shifts upward by the amount of the tax.b.quantity supplied increases for all conceivable prices of the good.c.buyers of the good will send tax payments to the government.d.demand curve shifts to the right by the horizontal distance of the tax.ANS: C DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Definitional26. When a tax is levied on the sellers of a good, thea.supply curve shifts upward by the amount of the tax.b.quantity demanded decreases for all conceivable prices of the good.c.quantity supplied increases for all conceivable prices of the good.d.None of the above is correct.ANS: A DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Interpretive27. A $2.00 tax per gallon of paint placed on the sellers of paint will shift the supply curvea.downward by exactly $2.00.b.downward by less than $2.00.c.upward by exactly $2.00.d.upward by less than $2.00.ANS: C DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: Tax incidenceMSC: Interpretive28. When a tax on a good is enacted,a.buyers and sellers share the burden of the tax regardless of whether the tax is levied on buyers or onsellers.b.buyers always bear the full burden of the tax.c.sellers always bear the full burden of the tax.d.sellers bear the full burden of the tax if the tax is levied on them; buyers bear the full burden of thetax if the tax is levied on them.ANS: A DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: Tax incidenceMSC: Interpretive29. A tax placed on a gooda.causes the effective price to sellers to increase.b.affects the welfare of buyers of the good but not the welfare of sellers.c.causes the equilibrium quantity of the good to decrease.d.creates a burden that is usually borne entirely by the sellers of the good.ANS: C DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: Tax incidenceMSC: Interpretive30. When a tax is levied on buyers of a good,ernment collects too little revenue to justify the tax if the equilibrium quantity of the gooddecreases as a result of the tax.b.there is an increase in the quantity of the good supplied.c. a wedge is placed between the price buyers pay and the price sellers effectively receive.d.the effective price to buyers decreases because the demand curve shifts leftward.ANS: C DIF: 2 REF: 8-1NAT: Analytic LOC: Supply and demand TOP: TaxesMSC: Applicative。