HOMEWORK 14

Refer to Figure 6-22. How much tax revenue does this tax generate for the government? a. $60. b. $15. c. $80. d. $45.

a. $60.

Refer to Figure 6-24. The price paid by buyers after the tax is imposed is a. $21. b. $16. c. $24. d. $18.

c. $24.

The term tax incidence refers to a. widespread view that taxes (and death) are the only certainties in life. b. whether the demand curve or the supply curve shifts when the tax is imposed. c. whether buyers or sellers of a good are required to send tax payments to the government. d. the distribution of the tax burden between buyers and sellers.

d. the distribution of the tax burden between buyers and sellers.

When a binding price floor is imposed on a market to benefit sellers, a. all sellers benefit. b. no sellers actually benefit. c. some sellers benefit, and some sellers are harmed. d. some sellers benefit, but no sellers are harmed.

c. some sellers benefit, and some sellers are harmed.

If a binding price ceiling is imposed on the baby formula market, then a. the quantity of baby formula supplied will decrease. b. the quantity of baby formula demanded will increase. c. a shortage of baby formula will develop. d. All of the above are correct.

All of the above are correct.

A price ceiling is a. often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling. b. often imposed on markets in which "cutthroat competition" would prevail without a price ceiling. c. a legal maximum on the price at which a good can be sold. d. All of the above are correct.

a legal maximum on the price at which a good can be sold.

Refer to Figure 6-4. A government-imposed price floor of $12 in this market results in a. a surplus of 4 units. b. 10 units sold. c. a surplus of 2 units. d. 12 units sold.

a. a surplus of 4 units.

A surplus results when a a. binding price floor is imposed on a market. b. nonbinding price floor is removed from a market. c. nonbinding price floor is imposed on a market. d. binding price floor is removed from a market

a. binding price floor is imposed on a market.

Refer to Figure 6-2. The price ceiling a. causes a shortage of 85 units. b. causes a shortage of 45 units. c. is not binding, because it is set above the equilibrium price. d. causes a shortage of 40 units

a. causes a shortage of 85 units.

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would a. decrease by less than $500. b. decrease by more than $500. c. increase by an indeterminate amount. d. decrease by exactly $500.

a. decrease by less than $500.

Refer to Figure 6-1. In which panel(s) of the figure would there be a shortage of the good at the price ceiling? a. panel (b) only b. both panel (a) and panel (b) c. neither panel (a) nor panel (b) d. panel (a) only

a. panel (b) only

A legal minimum on the price at which a good can be sold is called a a. price floor. b. tax. c. price subsidy. d. price ceiling.

a. price floor.

Refer to Figure 6-22. The effective price sellers receive after the tax is imposed is a. $2.00. b. $3.00. c. $3.50. d. $5.00.

b. $3.00.

Refer to Figure 6-26. How much tax revenue does this tax produce for the government? a. $360 b. $480 c. $640 d. $120

b. $480

Refer to Figure 6-24. What is the amount of the tax per unit? a. $4 b. $8 c. $6 d. $2

b. $8

Refer to Table 6-2. A price floor set at $20 will a. not be binding. b. be binding and will result in a surplus of 125 units. c. be binding and will result in a surplus of 200 units. d. be binding and will result in a surplus of 75 units.

b. be binding and will result in a surplus of 125 units.

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would a. increase by exactly $5. b. increase by less than $5. c. increase by more than $5. d. decrease by an indeterminate amount

b. increase by less than $5.

A price ceiling is binding when it is set: a. below the equilibrium price, causing a surplus. b. above the equilibrium price, causing a shortage. c. above the equilibrium price, causing a surplus. d. below the equilibrium price, causing a shortage.

below the equilibrium price, causing a shortage.

Refer to Figure 6-24. In the after-tax equilibrium, government collects a. $1,680 in tax revenue; of this amount, $840 represents a burden on buyers and $840 represents a burden on sellers. b. $1,440 in tax revenue; of this amount, $960 represents a burden on buyers and $480 represents a burden on sellers. c. $1,680 in tax revenue; of this amount, $1,260 represents a burden on buyers and $420 represents a burden on sellers. d. $1,440 in tax revenue; of this amount, $720 represents a burden on buyers and $720 represents a burden on sellers.

c. $1,680 in tax revenue; of this amount, $1,260 represents a burden on buyers and $420 represents a burden on sellers.

Refer to Figure 6-26. The per-unit burden of the tax is a. $6 for buyers and $2 for sellers. b. $8 for buyers and $0 for sellers. c. $2 for buyers and $6 for sellers. d. $4 for buyers and $4 for sellers.

c. $2 for buyers and $6 for sellers.

Refer to Figure 6-9. A price ceiling set at a. $7 will be binding and will result in a surplus of 8 units. b. $7 will be binding and will result in a surplus of 4 units. c. $4 will be binding and will result in a shortage of 16 units. d. $4 will be binding and will result in a shortage of 8 units

c. $4 will be binding and will result in a shortage of 16 units.

Refer to Figure 6-24. Suppose sellers, rather than buyers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on buyers, the tax on sellers would result in a. buyers bearing the same share of the tax burden. b. sellers bearing the same share of the tax burden. c. the same amount of tax revenue for the government. d. All of the above are correct.

d. All of the above are correct.

If the government removes a tax on a good, then the price paid by buyers will a. increase, and the price received by sellers will decrease. b. decrease, and the price received by sellers will decrease. c. increase, and the price received by sellers will increase. d. decrease, and the price received by sellers will increase

d. decrease, and the price received by sellers will increase

A $5 tax levied on the buyers of pants will cause the a. demand curve for pants to shift up by $5. b. supply curve for pants to shift down by $5. c. supply curve for pants to shift up by $5. d. demand curve for pants to shift down by $5.

d. demand curve for pants to shift down by $5.

Refer to Figure 6-22. Buyers pay how much of the tax per unit? a. $1.50. b. $3.00. c. $5.00. d. $0.50.

a. $1.50.

Refer to Figure 6-4. A government-imposed price ceiling of $6 in this market results in a. a shortage of 4 units. b. a shortage of 8 units. c. 14 units sold. d. 10 units sold.

b. a shortage of 8 units.

Refer to Figure 6-22. Sellers pay how much of the tax per unit? a. $5.00. b. $1.50. c. $0.50. d. $3.00.

c. $0.50.

Refer to Figure 6-22. The amount of the tax per unit is a. $0.50. b. $3.00. c. $1.50. d. $2.00.

d. $2.00.

Refer to Figure 6-24. Andrew is a buyer of the good. Taking the tax into account, how much does Andrew effectively pay to acquire one unit of the good? a. $26 b. $18 c. $16 d. $24

d. $24

Refer to Figure 6-22. The price paid by buyers after the tax is imposed is a. $6.00. b. $3.50. c. $3.00. d. $5.00.

d. $5.00.