ECON CHAPTER 6
A tax on the buyers of popcorn increases the size of the popcorn market
False
Economists use the term tax incidence to refer to who is legally responsible for paying the tax
False
If a tax is imposed on a market with elastic demand and inelastic supply, buyers will bear most of the burden of the tax
False
If a tax is imposed on the buyer of a product, the tax incidence will fall entirely on the buyer, causing the buyer to pay more
False
If buyers are required to pay a $0.10 tax per bag on Hershey's kisses, the demand for kisses will shift up by $0.10 per bag
False
In the end, tax incidence depends on the legislated burden
False
Suppose that a tax is placed on DVDs. If the seller ends up paying the majority of the tax we know that the demand curve is more inelastic than the supply curve
False
Suppose that a tax is placed on books. If the buyer pays the majority of the tax we know that the supply curve is more inelastic than the demand curve
False
The incidence of a tax depends on whether the tax is levied on buyers or sellers
False
The initial effect of a tax on the buyers of a good is on the supply of that good
False
The term tax incidence refers to the Boston Tea Party.
False
Who pays the majority of a tax levied on a product depends on whether the tax is placed on the buyer or the seller
False
A government imposed tax on a market shrinks the size of the market
True
A tax on golf clubs will cause the equilibrium market price of gold clubs to increase and the equilibrium quantity sold to decrease
True
A tax on sellers shifts the supply curve upward by exactly the size of the tax
True
A tax on the sellers of cell phones will reduce the size of the cell phone market
True
A tax placed on the seller of a good raises the price buyers pay and lowers the price sellers receive.
True
A tax placed on the seller of a product will raise equilibrium price and lower equilibrium quantity
True
A tax placed on the sellers of blueberries increases costs, lowers profit and shifts supply to the left (upward)
True
Buyers of a product will pay the majority of a tax placed on a product when supply is more elastic than demand
True
Economic policies often have effects that their architects did not intend or anticipate
True
For the most part, a tax burden falls most heavily on the side of the market that is more inelastic.
True
For the most part, all governments, federal, state, and local, rely on taxes to raise revenue for public purposes
True
For the most part, buyers and sellers share the burden of the tax
True
If a tax is imposed on a market with inelastic demand and elastic supply, buyers will bear most of the burden of the tax
True
If a tax is imposed on the buyer of a product the demand curve would shift downward by the amount of the tax.
True
If a tax is levied on the seller of a product the demand curve will not change
True
If buyers of a product are required to pay a tax, the demand curve for the product will shift downward by exactly the size of the tax
True
In general, a tax burden falls more heavily on the side of the market that is more inelastic
True
Lawmakers can decide whether the buyer or the seller must send a tax to the government but they cannot legislate the true burden of a tax
True
Policymakers use taxes both to raise revenue for public purposes and to influence market outcomes
True
The burden of a tax placed on a product depends on the supply and demand of that product.
True
When a tax is placed on the buyers of milk, the size of the milk market is reduced
True
When a tax is placed on the sellers of a product the size of the market is reduced.
True
When analyzing the economic effects of government policies, supply and demand are useful tools of analysis
True
