Deck 5: Market Outcomes and Tax Incidence

Question 1

When the price of a good decreases and all else is held constant

A) producer surplus increases.
B) both consumer surplus and producer surplus decrease.
C) both consumer surplus and producer surplus increase.
D) producer surplus decreases.
E) consumer surplus decreases.

Answer 1

producer surplus decreases.

Question 2

Consider the market for socks.The current price of a pair of plain white socks is $5.00.Two consumers,Igor and Samir,are willing to pay $7.25 and $8.00,respectively,for a pair of plain white socks.Two sock manufacturers are willing to sell plain white socks for as little as $4.00 and $4.15 per pair.How much is total consumer surplus in this market?

A) $2.25
B) $3.00
C) $0.75
D) $5.25
E) $15.25

Answer 2

$5.25

Question 3

Producer surplus is defined as the

A) difference between the willingness to pay for a good and the willingness to sell it.
B) difference between the price the seller receives and the willingness to sell it.
C) difference between the willingness to pay for a good and the price paid to get it.
D) quantity of units that consumers want to buy at the market price.
E) total revenue earned from producing and selling some good.

Answer 3

difference between the price the seller receives and the willingness to sell it.

Question 4

Jung is willing to pay $85 for a new jacket that sells for $70.Eddie is willing to pay $65 for that same jacket.What is the total consumer surplus for Jung and Eddie?

A) $30
B) $15
C) $20
D) $25
E) $155

Question 5

Consumer surplus is the difference between

A) supply and demand.
B) the price the producer receives and the willingness to sell a good.
C) the willingness to pay for a good and the willingness to sell a good.
D) the willingness to pay for a good and the amount that is paid to get it.
E) the price paid for a good and the amount of the good produced.

Question 6

Priscilla is willing to pay $65 for a new pair of shoes.Pandora is willing to pay $50 for the same shoes.The shoes have a price of $45.What is the total consumer surplus for Priscilla and Pandora?

A) $15
B) $20
C) $5
D) $25
E) $35

Question 7

The difference between the willingness to sell a good and the price a producer receives is also known as

A) producer profit.
B) producer surplus.
C) consumer waste.
D) tax revenue.
E) producer benefit.

Question 8

All else held constant,an increase in the price of a good would necessarily

A) increase social welfare.
B) decrease producer surplus.
C) decrease consumer surplus.
D) increase consumer surplus.
E) increase the supply of the good.

Question 9

Holding all else constant,when the price of a good increases

A) consumer surplus increases.
B) producer surplus decreases.
C) both producer surplus and consumer surplus increase.
D) both consumer surplus and producer surplus decrease.
E) consumer surplus decreases.

Question 10

The difference between the willingness to pay for a good and the amount that is paid to get it is also known as

A) consumer expenditure.
B) surplus spending.
C) consumer benefit.
D) producer profit.
E) consumer surplus.

Question 11

When the price of a good increases and all else is held constant

A) both consumer surplus and producer surplus decrease.
B) both consumer surplus and producer surplus increase.
C) consumer surplus decreases.
D) producer surplus decreases.
E) producer surplus increases.

Question 12

Use the following graph to answer the following questions.

In the figure,which area represents the producer surplus?

A) area A
B) area B
C) area C
D) area D
E) area E

Question 13

Consumer surplus is defined as the

A) difference between the willingness to pay for a good and the willingness to sell it.
B) total revenue earned from producing and selling some good.
C) difference between the willingness to pay for a good and the price paid to get it.
D) quantity of units that consumers want to buy at the market price.
E) difference between the price the seller receives and the willingness to sell it.

Question 14

All else held constant,a decrease in the price of a good would necessarily

A) increase social welfare.
B) decrease producer surplus.
C) decrease consumer surplus.
D) increase demand for the good.
E) increase producer surplus.

Question 15

Use the following graph to answer the following questions.

In the figure,which region represents the consumer surplus?

A) area A
B) area B
C) area C
D) area D
E) area E

Question 16

Another name for a consumer's willingness to pay is the

A) limiting cost.
B) expense cap.
C) hidden budget.
D) reservation price.
E) maximum outlay.

Question 17

Producer surplus is the difference between

A) supply and demand.
B) the price the producer receives and the willingness to sell a good.
C) the willingness to pay for a good and the willingness to sell a good.
D) the willingness to pay for a good and the amount that is paid to get it.
E) the price paid for a good and the amount of the good produced.

Question 18

For a given good,a consumer's willingness to pay is,by definition,the

A) same as the seller's willingness to sell.
B) amount of cash the consumer has on hand for purchase of the good.
C) amount the consumer offers at the start of a negotiation.
D) intensity of the consumer's desire for the good.
E) maximum price the consumer would pay for the good.

Question 19

Use the following graph to answer the following questions.


-In the figure,which combination of areas represents the social welfare?

A) A + D
B) B + C
C) D + E
D) A + B
E) C + D

Question 20

Holding all else constant,when the price of a good decreases

A) producer surplus increases.
B) consumer surplus increases.
C) both consumer surplus and producer surplus increase.
D) consumer surplus decreases.
E) both consumer surplus and producer surplus decrease.

Question 21

A market has reached an efficient outcome when

A) producers are able to produce and sell as much as they like.
B) total surplus is minimized.
C) producer surplus is greater than consumer surplus.
D) consumers are able to purchase as much as they like.
E) total surplus is maximized.

Question 22

Sammy's Bakery and Presley's Sweetshop both sell cupcakes.The market price of one chocolate cupcake is $2.50.Sammy's is willing to sell a cupcake for as little as $1.65; Presley's is willing to sell a cupcake for as little as $1.75.What is the total producer surplus for the two firms?

A) $0.75
B) $1.60
C) $0.85
D) $2.50
E) $3.40

Question 23

Consider the market for socks.The current price of a pair of plain white socks is $5.00.Two consumers,Jeff and Samir,are willing to pay $7.25 and $8.00,respectively,for a pair of plain white socks.Two sock manufacturers are willing to sell plain white socks for as little as $4.00 and $4.15 per pair.What is the total producer and consumer surplus (i.e. ,social welfare)in this market?

A) $7.10
B) $5.25
C) $1.85
D) $23.40
E) $4.50

Question 24

Social welfare (i.e. ,the sum of producer and consumer surplus)is maximized when

A) the government taxes most goods and services.
B) very few consumers and producers exist within a market.
C) the market reaches its equilibrium price and quantity.
D) supply and demand are perfectly inelastic.
E) the government imposes price controls.

Question 25

Consumer surplus plus producer surplus equals

A) deadweight loss.
B) economic profit.
C) social welfare.
D) tax revenue.
E) market distortions.

Question 26

Questions about the equity of a tax are concerned mostly with

A) efficiency.
B) tax revenue.
C) fairness.
D) deadweight loss.
E) elasticity.

Question 27

Social welfare is measured as the sum of

A) tax revenue and deadweight loss.
B) deadweight loss and consumer surplus.
C) producer surplus and tax revenue.
D) consumer surplus and tax revenue.
E) consumer surplus and producer surplus.

Question 28

Which of the following statements is concerned with efficiency rather than equity?

A) Sales taxes on food are regressive and should be eliminated.
B) Income taxes should be raised on low-income families so that everyone pays.
C) The United States should implement a wealth tax on upper-income households.
D) Excise taxes tend to raise prices for consumers.
E) The overall tax system in the United States should be much more progressive.

Question 29

Which of the following statements is concerned with efficiency rather than equity?

A) It is not fair to tax the income earned by the wealthy at higher rates than the poor.
B) Excise taxes on tobacco products affect low-income families the most and should be reduced.
C) Our income tax system should be more progressive than it is now.
D) Taxes cause distortions in markets and reduce social welfare.
E) The best type of income tax is a flat tax because it treats everyone the same.

Question 30

LDT Products,Inc. ,designs and sells flannel jackets.The company is willing to sell a men's flannel jacket for as little as $45.Its main competitor is MK Outriggers,which is willing to sell the same men's flannel jacket for as little as $40.The current market price of that type of jacket is $57.What is the total producer surplus for the two firms?

A) $95
B) $12
C) $17
D) $29
E) $5

Question 31

Another name for social welfare is

A) total surplus.
B) combined equity.
C) collective good.
D) common benefit.
E) net per-capita gain.

Question 32

Producer surplus is depicted by the area

A) above market price and below the supply curve.
B) between the supply curve and the demand curve.
C) below market price and above the supply curve.
D) above market price and below the demand curve.
E) above the demand curve and below the supply curve.

Question 33

When looking at a graph,the area under the demand curve and above market price is defined as

A) tax revenue.
B) spending surplus.
C) consumer benefit.
D) producer surplus.
E) consumer surplus.

Question 34

When looking at a graph,the area above the supply curve and below market price is defined as

A) consumer surplus.
B) producer surplus.
C) producer benefit.
D) business profit.
E) tax revenue.

Question 35

For a given good,a seller's willingness to sell is,by definition,the

A) minimum price the seller would accept for the good.
B) amount of cash the seller needs to cover cash flow requirements.
C) amount the seller asks for at the start of a negotiation.
D) intensity of the seller's personal attachment to the good.
E) same as the consumer's willingness to pay.

Question 36

The price-quantity combination found where the supply and demand curves intersect is a unique combination that is efficient because

A) producers can sell as much as they want.
B) total surplus is maximized.
C) tax revenue is sufficient to pay for government services.
D) consumers can buy as much as they want.
E) new products are being introduced.

Question 37

When looking at a supply and demand graph,you would find producer surplus

A) above the demand curve and below the supply curve.
B) below the demand curve and above market price.
C) to the right of equilibrium quantity and above market price.
D) above the demand curve and above the supply curve.
E) below market price and above the supply curve.

Question 38

When looking at a supply and demand graph,you would find consumer surplus

A) above the demand curve and below the supply curve.
B) below the demand curve and above market price.
C) to the right of equilibrium quantity and above market price.
D) above the demand curve and above the supply curve.
E) below market price and above the supply curve.

Question 39

Consider the market for socks.The current price of a pair of plain white socks is $5.00.Two consumers,Igor and Samir,are willing to pay $7.25 and $8.00,respectively,for a pair of plain white socks.Two sock manufacturers are willing to sell plain white socks for as little as $4.00 and $4.15 per pair.What is the total producer surplus in this market?

A) $0.15
B) $8.15
C) $0.85
D) $1.00
E) $1.85

Question 40

What happens to the amount of consumer surplus and producer surplus when the supply of scarves suddenly declines (shifts left)?

A) Producer surplus declines and consumer surplus is unchanged.
B) Consumer surplus declines and producer surplus is unchanged.
C) Consumer surplus declines and producer surplus declines.
D) Consumer surplus is unchanged and producer surplus is unchanged.
E) Producer surplus increases and consumer surplus increases.

Question 41

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.


-Which areas represent producer surplus before the tax is imposed?

A) F + G
B) E + C + G
C) A + B + C + E
D) B + C + F + G
E) E

Question 42

"When a good is divided up,it is important that none of the good go to waste." This statement emphasizes

A) fairness.
B) zero surplus.
C) efficiency.
D) equity.
E) equal welfare.

Question 43

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.


-Which areas represent the total tax revenue created as a result of the tax?

A) A + C
B) A + E
C) B + C
D) A + E + F + G
E) A + B + C + D + E + F + G

Question 44

Which of the following statements is concerned with equity rather than efficiency?

A) Imposing a tax on a good reduces the incentive to buy that good.
B) The burden of a new sales tax typically increases prices.
C) Deadweight loss is the lost social welfare from a tax.
D) Tax rates on middle-class households are too high and should be reduced.
E) Taxes cause producers and consumers to lose surplus.

Question 45

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.


-Which areas represent the deadweight loss created as a result of the tax?

A) A + B + C + E + F + G
B) A + C
C) A + B + C + E
D) F + G
E) B + C + F + G

Question 46

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.


-Which areas represent consumer surplus after the tax is imposed?

A) A
B) A + B
C) A + B + F
D) F + G
E) B + C + F

Question 47

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.


-Which areas represent consumer surplus before the tax is imposed?

A) A + B + F
B) A
C) C + G + E
D) B + C
E) F + G

Question 48

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.


-Which areas represent the amount of consumer surplus lost due to the tax?

A) A + F
B) B + C
C) A
D) A + B + F
E) B + F

Question 49

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.

Which party is responsible for paying this tax out of pocket?

A) consumers
B) producers
C) both consumers and producers
D) some consumers and some producers,but not all consumers and producers
E) some consumers and no producers

Question 50

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.


-Which areas represent the total cost to society,in terms of lost social welfare,created as a result of the tax?

A) B + C + F + G
B) A + B + F
C) C + E + G
D) A + B + C + E
E) F + G

Question 51

Which of the following statements is concerned with equity rather than efficiency?

A) Almost all taxes create some amount of deadweight loss.
B) Excise taxes tend to raise prices for consumers and reduce sales for firms.
C) Tax rates on the wealthy are too low and should be raised.
D) The incidence of a tax does not depend on who actually pays it.
E) Taxes generate revenues that governments spend on services.

Question 52

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.


-Which areas represent producer surplus after the tax is imposed?

A) E + C + G
B) E + C
C) E + G
D) F + G
E) E

Question 53

"When a good is divided up,it is important that everyone get an equal share." This statement emphasizes

A) maximum surplus.
B) efficiency.
C) aggregation.
D) equity.
E) total welfare.

Question 54

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.


-Which areas represent the total lost consumer and producer surplus (i.e. ,social welfare)as a result of the tax?

A) A + B + C + E + F + G
B) A + C
C) A + B + C + E
D) F + G
E) B + C + F + G

Question 55

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.


-What is the total amount of producer and consumer surplus (i.e. ,social welfare)in this market before the tax is imposed?

A) A + B + C + E + F + G
B) A + C
C) A + B + C + E
D) F + G
E) B + C+ F + G

Question 56

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.


-What is the total amount of producer and consumer surplus (i.e. ,social welfare)in this market after the tax is imposed?

A) A + B + C + E + F + G
B) A + E
C) A + B + C + E
D) F + G
E) B + C + F + G

Question 57

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.


-Which areas represent the revenue collected from this tax?

A) A + B + F
B) B + C
C) F + G
D) E
E) A + E

Question 58

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.


-Which areas represent the amount of producer surplus lost due to the tax?

A) G
B) A + B + C + E
C) C
D) C + G
E) B + F

Question 59

A tax on apples would cause consumers to suffer because

A) consumer surplus would increase.
B) the price of apples would increase and fewer apples would be purchased.
C) revenues for apple growers would decrease.
D) the government would collect revenue from the tax.
E) producer surplus would decrease.

Question 60

Use the following information to answer the following questions.
The following graph depicts a market where a tax has been imposed.P_e was the equilibrium price before the tax was imposed,and Q_e was the equilibrium quantity.After the tax,P_C is the price that consumers pay,and P_S is the price that producers receive.Q_T units are sold after the tax is imposed.NOTE: The areas B and C are rectangles that are divided by the supply curve S_T.Include both sections of those rectangles when choosing your answers.


-What is the amount of the tax,as measured along the y axis?

A) P_C + P_S
B) P_e - P_S
C) P_C - P_S
D) P_C - P_e
E) P_e + P_S

Question 61

It is said that taxes drive a wedge between prices.This statement is true because taxes cause

A) both consumer and producer prices to increase.
B) the consumer price to increase but leave producer prices unchanged.
C) both consumer and producer prices to decrease.
D) the consumer price to decrease and the producer price to increase.
E) the consumer price to increase and the producer price to decrease.

Question 62

The incidence of a tax reflects

A) who pays the tax out of pocket.
B) how much tax revenue the tax generates.
C) who bears the burden of the tax.
D) how the tax revenue from the tax is spent.
E) government efficiency in providing goods and services.

Question 63

Excise taxes are taxes that are

A) applied to all goods and activities.
B) usually applied to inferior goods.
C) usually applied to income and capital gains.
D) never applied to goods or activities.
E) applied to a particular good or activity.

Question 64

When a tax is imposed on some good,what usually happens to consumer and producer surplus?

A) They both increase.
B) They both fall to zero.
C) They both decrease.
D) Consumer surplus increases and producer surplus decreases.
E) Consumer surplus decreases and producer surplus increases.

Question 65

If a tax causes the supply curve to shift,we know that the tax is paid out of pocket by

A) consumers.
B) producers.
C) the government.
D) both producers and consumers.
E) consumer,producers,and the government.

Question 66

When a tax is imposed on some good,what tends to happen to consumer prices and producer prices?

A) Consumer prices decrease and producer prices increase.
B) Consumer prices increase and producer prices decrease.
C) Consumer prices increase and producer prices increase.
D) Consumer prices decrease and producer prices decrease.
E) Consumer prices and producer prices converge at the same point.

Question 67

After a tax is imposed,the price paid by consumers ________ and the price received by producers ________.

A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) is unaffected; is unaffected

Question 68

A tax that is applied to one specific good or service is a(n)________ tax.

A) sales
B) general local option sales
C) property
D) excise
E) wealth

Question 69

When a tax is imposed on some good,what happens to the amount of the good bought and sold?

A) It increases.
B) It decreases.
C) It decreases,but only if the tax is imposed on producers.
D) It decreases,but only if the tax is imposed on consumers.
E) It increases,but only if the tax is imposed on consumers.

Question 70

The incidence of a tax is unrelated to

A) how responsive producers are to the tax.
B) how responsive consumers are to the tax.
C) the elasticity of supply.
D) the elasticity of demand.
E) who pays the tax out of pocket.

Question 71

A tax on apples would cause apple growers to suffer because

A) consumer surplus would decrease.
B) the government would collect revenue from the tax.
C) consumers would pay higher prices.
D) producer surplus would increase.
E) revenues and profits from growing apples would decrease.

Question 72

A tax on apples would cause the price paid by consumers to ________ and the price received by producers to ________.

A) increase; increase
B) increase; decrease
C) decrease; increase,then decrease
D) decrease; decrease
E) increase,then decrease; increase

Question 73

A tax on producers would cause the ________ curve(s)to shift to the ________.

A) demand; left
B) supply and demand; left
C) supply; left
D) supply; right
E) supply and demand; right

Question 74

A tax on milk would likely cause an increase in the

A) price consumers pay for milk.
B) price producers receive for milk.
C) amount of milk sold.
D) revenues earned from selling milk.
E) profits earned by selling milk.

Question 75

In most cases,taxes reduce economic efficiency because

A) they lower prices for consumers and cause firms to suffer.
B) they increase firms' profits at the expense of consumers.
C) taxes are perceived as unfair by some taxpayers.
D) the government often spends tax revenues on programs that some voters don't like.
E) they reduce consumer surplus and producer surplus.

Question 76

A tax on consumers would cause the ________ curve(s)to shift to the ________.

A) demand; right
B) supply; left
C) supply and demand; left
D) supply and demand; right
E) demand; left

Question 77

A tax on consumers of a good would shift the ________ curve down and cause the price paid by consumers to ________.

A) supply; increase
B) demand; decrease,then return to its original level
C) supply; decrease
D) demand; increase
E) supply; increase,then return to its original level

Question 78

A tax on milk would likely cause a decrease in the

A) price consumers pay for milk.
B) price of products made from milk.
C) amount of milk sold.
D) revenues from the milk tax.
E) deadweight loss from the milk tax.

Question 79

Excise taxes are popular sources of revenue for governments because

A) they have very high levels of deadweight loss.
B) they are easy to understand.
C) consumers are rarely aware that they are paying them.
D) they are very stable sources of revenue.
E) they require very little paperwork.

Question 80

The difference between the price consumers pay and the price sellers receive after a tax is imposed is equal to the

A) loss of social welfare from the tax.
B) dollar amount of the tax.
C) deadweight loss from the tax.
D) revenue from the tax.
E) lost profit from the tax.