microeconomics quiz 6

which of the following is correct concerning the burden of a tax imposed on coffee mugs? a. buyers and sellers share the burden of the tax b. buyers bear the entire burden of the tax c. sellers bear the entire burden of the tax. d. it depends on whether the buyers or the sellers are required to pay the tax

a. buyers and sellers share the burden of the tax

if a tax is imposed on a market with inelastic demand and elastic supply a. buyers will bear most of the burden of the tax b. sellers will bear most of the burden of the tax c. the burden of the tax will be shared equally between buyers and sellers d. there is no way to determine how the burden of the tax will be shared

a. buyers will bear most of the burden of the tax

which of the following statements is true regarding cigarette taxes? a. cigarette manufacturers bear almost all of the cigarette taxes b. cigarette manufacturers tend to ship their product from low tax states to high tax states c. the elasticity of cigarette supply in all states is very small so cigarette manufacturers receive higher after tax prices in higher tax states d. after tax prices received by cigarette manufacturers are about the same in all states

a. cigarette manufacturers bear almost all of the cigarette taxes

buyers bear a greater share of a tax burden when a tax is imposed in a market where a. demand is more elastic than supply b. supply is more elastic than demand c. the tax is imposed on sellers d. the tax is imposed on buyers

a. demand is more elastic than supply

a tax on sellers of apples: a. leads sellers to supply fewer apples at every price b. leads sellers to supply more apples at every price c. causes the supply curve to shift to the right d. .leads buyers to demand more apples of every price

a. leads sellers to supply fewer apples at every price

a wage subsidy will a. reduce the wages received by workers b. reduce the number of workers employed c. increase the number of workers employed d. increase the unemployment rate, especially among low skilled workers

a. reduce the wages received by workers

when a tax is imposed on consumers the demand curve will a. shift downward by the amount of the tax b. shift upward by the amount of the tax c. shift downward by less than the amount of the tax d. not shift since sellers collect per unit taxes

a. shift downward by the amount of the tax

suppose there is a tax of $50 on bicycles. the supply curve for bicycles slopes upward. the demand curve for bicycles slopes downward. sellers are required by law to pay the tax. if the tax is reduced from $50 to $10 per bicycle, then the a. supply curve will shift down by $40 b. demand curve will shift downward by $40 c. demand curve will shift upward by $40 d. supply curve will shift upward by $40

a. supply curve will shift down by $40

with regard to tax burden, what does the "elasticity=escape" idea tell you? a. that the curve (between demand and supply) that is relatively more elastic will bear less of the tax burden b. that the curve (between demand and supply) that is relatively more inelastic will bear less of the tax burden c. that the curve (between demand and supply) that is relatively more elastic will escape the tax burden entirely d. that the ratio of the buyers' tax burden to the sellers' tax burden is always greater than 1

a. that the curve (between demand and supply) that is relatively more will bear less of the tax burden

a tax and subsidy are similar in that I. they both create a deadweight loss II. the burden of the tax and benefit of the subsidy depend on relative elasticities of demand and supply III. they both change the equilibrium level of output a. I b. I and II c. I II and III d. I and III

b. I and II

a tax on sellers of popcorn will a. increase the size of the popcorn market b. reduce the size of the popcorn market c. may increase, decrease, or have no effect on the size of the popcorn market d. have no effect on the size of the popcorn market

b. reduce the size of the popcorn market

which of the following statements are true? the buyer will pay more of the tax burden if I. the good is a luxury good II. the good is a necessity III. the good has no substitutes. a. I b. II c. II and III d. I and III

c.

which of the following statements is TRUE? I. a $0.50 tax on each fishing lure sold raises the price per lure by $0.50. II. a tax on sellers is equivalent to a tax on buyers III. a tax on buyers is analyzed by shifting the demand curve up by the amount of tax a. I and II b. II and III c. II d. I, II, III

c. II

not only do both wage subsidies and minimum wages increase wages, but a. they also increase employment b. they also reduce employment c. subsidies increase employment, whereas minimum wages reduce it d. subsidies reduce employment, whereas minimum wages increase it

c. subsidies increase employment, whereas minimum wages reduce it

the question of who pays the greater amount of a commodity tax is determined by a. Congress b. the President of the United States c. the relative elasticities of demand and supply d. the individual who writes the check for the tax

c. the relative elasticities of demand and supply

without taxes, the market price per bag of apples is $5. with a $2 tax per bag of apples, buyers now pay $5.75 per bag. what is the final price per bag of apples received by sellers? a. $5.00 b. $7.75 c.$3.00 d. $3.75

d. $7.75

why do smokers pay almost all the taxes assessed on cigarettes? I. because they are addictive, the demand for cigarettes is relatively elastic when compared to the supply curve of cigarettes II. because they are addictive, the demand for cigarettes is relatively inelastic when compared to the supply of cigarettes III. cigarette manufactures can very elastic escape a state tax by selling in a different state a. I b. II c. I and III d. II and III

d. II and III

which of the following is a correct statement about tax burdens a. a tax burden is distributed independently of relative elasticities of supply and demand b. a tax burden falls most heavily on the side of the market that is closer to unit elastic c. a tax burden falls more heavily on the side of the market that is less elastic d. a tax burden falls most heavily on the side of the market that is more elastic.

d. a tax burden falls most heavily of the side of the market that is more elastic

if the elasticity of demand is 2 in absolute value, and the elasticity of supply is 1 in absolute value, how much of a tax burden will the buyer bear relative to the seller? a. the buyer will bear more of the tax burden than will the seller b. the seller will bear more of the tax burden than will the buyer c. the buyer and seller will share the tax burden equally d. the buyer will not bear none of the tax burden since demand curve is twice as elastic as supply

d. the buyer will not bear non of the tax burden since demand curve is twice as elastic as supply