Chapter 8

Total surplus with a tax is equal to

$12.

Refer to Figure 8-6. The benefits to the government (total tax revenue) would be

$120.

Refer to Figure 8-6. Consumer surplus before the tax was levied equaled

$125.

Refer to Figure 8-6. Producer surplus before the tax equaled

$125.

Refer to Figure 8-6. The price buyers pay after the tax is

$16.

Refer to Figure 8-6. The total surplus with the tax would equal

$210.

Refer to Figure 8-6. The total surplus before the tax would equal

$250.

Refer to Figure 8-6. The amount of deadweight loss in this market resulting from the levying of the tax is

$40.

Refer to Figure 8-6. After the tax is levied, consumer surplus would be

$45.

Refer to Figure 8-6. After the tax is levied, producer surplus would be

$45.

Refer to Figure 8-6. The price sellers receive after the tax is

$8.

Refer to Figure 8-6. The reduction in consumer surplus caused by the tax would be

$80.

Refer to Figure 8-6. The reduction in producer surplus caused by the tax would be

$80.

Refer to Figure 8-4. Consumer surplus before the tax was levied is represented by area

A + B + C.

Refer to Figure 8-4. The total surplus (consumer, producer, and government) with the tax is represented by area

A + B + D + F.

Which of the following is the most correct statement about tax burdens?

A tax burden falls most heavily on the side of the market that is inelastic.

Refer to Figure 8-4. After the tax is levied, consumer surplus is represented by area

A.

Refer to Figure 8-4. The tax caused a reduction in consumer surplus represented by area

B + C.

Refer to Figure 8-4. The benefits to the government (total tax revenue) is represented by area

B + D.

Refer to Figure 8-4. The loss in total welfare resulting from the levying of the tax is represented by area

C + E.

Refer to Figure 8-4. Producer surplus before the tax is represented by area

D + E + F.

Refer to Figure 8-4. The tax caused a reduction in producer surplus represented by area

D + E.

Refer to Figure 8-4. After the tax is levied, producer surplus is represented by area

F.

Refer to Figure 8-4. The equilibrium market price before the tax is imposed is:

P1.

Refer to Figure 8-4. The price sellers receive after the tax is

P2.

Refer to Figure 8-4. The price buyers pay after the tax is

P3.

When a tax is levied on a good

both price and quantity of the good sold will change.

Whether a tax is levied on the buyer or seller of the good does not matter because

buyers and sellers share the burden of the tax.

Economic analysis uses which of the following to judge the effect of taxes on economic welfare?

consumer and producer surplus

Total surplus with a tax is equal to

consumer surplus, producer surplus, and tax revenue.

A tax levied on the buyers of a product shifts the

demand curve downward (or to the left).

When a tax is imposed on a good we know that the losses to buyers and sellers

exceed the revenue raised by the government.

Deadweight loss measures the

loss in a market to buyers and sellers that is not offset by an increase in government revenue.

To analyze economic well-being in an economy it is necessary to use

producer and consumer surplus.

If a tax is imposed on a market with elastic demand and inelastic supply,

sellers will bear most of the burden of the tax.

A tax levied on the supplier of a product shifts the

supply curve upward (or to the left).