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