Econ 202 Ch 8 Q&A

Taxes on labor encourage which of the following?

workers to work overtime

If the labor supply curve is very elastic, a tax on labor

has a large deadweight loss

If the labor supply curve is nearly vertical, a tax on labor

has little impact on the amount of work that workers are willing to do

A tax levied on the buyers of a good shifts the

demand curve downward (or to the left)

Other things equal, the deadweight loss of a tax

increase as the size of the tax increase, and the increase in the deadweight loss is more rapid than the increase in the size of the tax

The Social Security tax is a tax on

labor

The higher a country's tax rates, the more likely that country will be

on the negatively sloped part of the Laffer curve

If the tax on a good is doubled, the deadweight loss of the tax

quadruples

For a good that is taxed, the area of the relevant supply-and-demand graph that represents government's tax revenue is

smaller than the area that represents the loss of consumer surplus and producer surplus caused by the tax

The Laffer curve illustrates that

tax revenue first rises, then falls as a tax increases