Question 1

Which of the following statements is TRUE?
I. A $0.50 tax on each fishing lure sold raises the price per lureby $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 curveup by the amount of the tax.

Accepted Answer

Statement I is false because a tax on fishing lures would increase the price per lure by more than just the amount of the tax. Statement II is generally true, as a tax on sellers will lead to an increase in price for buyers, effectively making it equivalent to a tax on buyers. Statement III is false, as a tax on buyers would lead to a leftward shift of the demand curve, not an upward shift.

Question 2

A tax on sellers of popcorn will:

Accepted Answer

A tax on sellers of popcorn will increase the cost of producing popcorn, which will lead to an increase in its price. As a result, demand will decrease, leading to a reduction in the size of the popcorn market.

Question 3

(Figure: Tax on Consumers of Gadgets) According to thefigure, what is the amount of the tax that has been imposed ongadgets?
Figure: Tax on Consumers of Gadgets

Accepted Answer

A

Question 4

(Figure: Tax on Sellers) Refer to the figure. Suppose theimposition of a per-unit tax on sellers shifts the supply curvefrom S0 to S₁. The equilibrium quantity sold under the tax is:

Accepted Answer

The answer of  (Figure: Tax on Sellers) Refer to...

Question 5

Figure: Tax on Sellers (Figure: Tax on Sellers) Refer to the figure. Suppose theimposition of a per-unit tax on sellers shifts the supply curvefrom S0 to S₁. With the tax, buyers pay ________ and sellersreceive ________.

Accepted Answer

The answer of Figure: Tax on Sellers  (Figure: Tax...

Question 6

(Figure: Tax on Sellers of Gadgets) According to the figure,what is the amount of the tax that has been imposed on the saleof gadgets?

Accepted Answer

The figure shows a tax of $1.00 per gadget being imposed on the sellers. There are 5 gadgets being sold, so the total tax paid by the sellers is $5.00. However, since the tax is often passed on to the buyers, the consumers end up paying more than the original price of the gadget.

Question 7

The question of who pays the greater amount of a commoditytax is determined by:

Accepted Answer

The relative elasticities of demand and supply determine who pays the greater amount of a commodity tax. If the demand for a good is more elastic than its supply, then the producer will bear a greater share of the tax burden. On the other hand, if supply is more elastic than demand, then the consumer will bear a greater burden of the tax. This allocation of the tax burden is based on the principle of supply and demand and market forces, rather than being determined by Congress or the President.

Question 8

(Figure: Tax on Sellers) If a $3 tax per unit purchased wasplaced on buyers instead of sellers, buyers would pay ________and sellers would receive ________.

Accepted Answer

The answer of  (Figure: Tax on Sellers) If a...

Question 9

When a tax is imposed on consumers the demand curve will:

Accepted Answer

When a tax is imposed on consumers, it increases the cost of the product, which reduces the amount of the good that consumers are willing and able to buy at any given price. This leads to a shift in the demand curve downward by the amount of the tax. The tax is effectively shared by both consumers and producers, with consumers paying part of the tax in the form of higher prices, and producers paying part of the tax in the form of lower revenues.

Question 10

(Figure: Tax Imposed on Sellers) According to the figure, theprice that buyers pay AFTER the tax is imposed is:

Accepted Answer

The tax shifts the supply curve upward by the amount of the tax ($0.60), resulting in a new equilibrium point at $4.40 where the quantity supplied and quantity demanded are equal. Therefore, the price that buyers pay after the tax is imposed is $4.40.

Question 11

A tax on sellers of apples:

Accepted Answer

A tax on sellers of apples increases the cost of producing apples, causing the supply curve to shift to the left. As a result, sellers will supply less apples at every price to maintain their profit margin, causing a decrease in the quantity supplied. Thus, the correct choice is A.

Question 12

(Figure: Tax on Sellers) Suppose the imposition of a per-unittax on sellers shifts the supply curve from S0 to S₁. Using thefigure, calculate the amount of the tax.

Accepted Answer

The answer of  (Figure: Tax on Sellers) Suppose the...

Question 13

Suppose there is a tax of $50 on bicycles. The supply curve forbicycles slopes upward. The demand curve for bicycles slopesdownward. Sellers are required by law to pay the tax. If the taxis reduced from $50 to $10 per bicycle, then the:

Accepted Answer

When the tax is reduced from $50 to $10, the cost of production for sellers is lowered by $40 per bicycle. This means that they can supply the same quantity of bicycles at a lower price. Therefore, the supply curve will shift downward by $40. The demand curve will remain unaffected by the change in tax.

Question 14

(Figure: Tax Imposed on Sellers) According to the figure, theprice that sellers receive AFTER the tax is imposed is:

Accepted Answer

The answer of  (Figure: Tax Imposed on Sellers) According...

Question 15

If a tax is imposed on sellers of a product the demand curvewill:

Accepted Answer

The imposition of a tax on sellers affects the supply side of the market, not the demand side. Therefore, the demand curve itself does not shift; instead, the supply curve shifts, reflecting the increased costs to sellers.

Question 16

A tax on the seller of a product:

Accepted Answer

A tax on the seller of a product raises the cost of production, leading to lower profits and supply. As a result, the supply curve shifts to the left. The increase in cost may also cause the seller to increase the take-home price, which may have an impact on the buyer's willingness to purchase the product. However, the demand curve is not affected by the tax, so it remains the same. The equilibrium quantity traded in the market may increase or decrease, depending on the magnitude of the shifts in the supply and demand curves.

Question 17

Which of the following is correct concerning the burden of a taximposed on coffee mugs?

Accepted Answer

When a tax is imposed on a good like coffee mugs, the price that buyers pay for the mugs increases, making them less willing to buy as much as they did before. At the same time, the increase in price may lead sellers to produce fewer mugs than before. As a result of these factors, both buyers and sellers end up sharing the burden of the tax, with the exact amount each party pays depending on various factors such as the relative price elasticity of demand and supply.

Question 18

Figure: Tax on Sellers of Gadgets  (Figure: Tax on Sellers of Gadgets) According to the figure,what is the tax revenue that the government collects from thetax on gadgets?

Accepted Answer

The answer of Figure: Tax on Sellers of Gadgets ...

Question 19

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 isthe final price per bag of apples received by sellers?

Accepted Answer

The $2 tax is borne by the buyers, so the sellers will receive the same market price per bag of apples as before the tax was implemented. Therefore, the final price per bag of apples received by sellers is $5.00.

Question 20

(Figure: Tax on Sellers of Gadgets) According to the figure,what is the amount of the deadweight loss caused by theimposition of the tax on gadgets?

Accepted Answer

The deadweight loss is the triangular area between the supply and demand curves and above the price inclusive of the tax. In this case, the deadweight loss triangle has a height of $5 and a base of 10 gadgets, making its area equal to 1/2 x $5 x 10 = $25. Since the tax reduces the quantity sold from 15 to 10 gadgets, the price inclusive of the tax increases from $5 to $6.50. The net loss in consumer and producer surplus is equal to area ABGH, which is another triangular area with a height of $1.50 and a base of 10 gadgets, making its area equal to 1/2 x $1.50 x 10 = $7.50. Therefore, the total deadweight loss is $25 + $7.50 = $32.50. Since the tax revenue is equal to $1 per gadget x 10 gadgets = $10, the actual loss in economic surplus is $32.50 - $10 = $22.50. Therefore, the correct answer is D) $50, which is the closest option to the calculated amount of deadweight loss.

Quiz 6: Consumer Choices

Which of the following statements is TRUE? I. A $0.50 tax on each fishing lure sold raises the price per lureby $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 curveup by the amount of the tax.

A tax on sellers of popcorn will:

(Figure: Tax on Consumers of Gadgets) According to thefigure, what is the amount of the tax that has been imposed ongadgets? Figure: Tax on Consumers of Gadgets

(Figure: Tax on Sellers) Refer to the figure. Suppose theimposition of a per-unit tax on sellers shifts the supply curvefrom S0 to S₁. The equilibrium quantity sold under the tax is:

Figure: Tax on Sellers (Figure: Tax on Sellers) Refer to the figure. Suppose theimposition of a per-unit tax on sellers shifts the supply curvefrom S0 to S₁. With the tax, buyers pay and sellersreceive .

(Figure: Tax on Sellers of Gadgets) According to the figure,what is the amount of the tax that has been imposed on the saleof gadgets?

The question of who pays the greater amount of a commoditytax is determined by:

(Figure: Tax on Sellers) If a $3 tax per unit purchased wasplaced on buyers instead of sellers, buyers would pay and sellers would receive .

When a tax is imposed on consumers the demand curve will:

(Figure: Tax Imposed on Sellers) According to the figure, theprice that buyers pay AFTER the tax is imposed is:

A tax on sellers of apples:

(Figure: Tax on Sellers) Suppose the imposition of a per-unittax on sellers shifts the supply curve from S0 to S₁. Using thefigure, calculate the amount of the tax.

Suppose there is a tax of $50 on bicycles. The supply curve forbicycles slopes upward. The demand curve for bicycles slopesdownward. Sellers are required by law to pay the tax. If the taxis reduced from $50 to $10 per bicycle, then the:

(Figure: Tax Imposed on Sellers) According to the figure, theprice that sellers receive AFTER the tax is imposed is:

If a tax is imposed on sellers of a product the demand curvewill:

A tax on the seller of a product:

Which of the following is correct concerning the burden of a taximposed on coffee mugs?

Figure: Tax on Sellers of Gadgets (Figure: Tax on Sellers of Gadgets) According to the figure,what is the tax revenue that the government collects from thetax on gadgets?

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 isthe final price per bag of apples received by sellers?

(Figure: Tax on Sellers of Gadgets) According to the figure,what is the amount of the deadweight loss caused by theimposition of the tax on gadgets?

Quiz 6: Consumer Choices

Which of the following statements is TRUE? I. A $0.50 tax on each fishing lure sold raises the price per lureby $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 curveup by the amount of the tax.

A tax on sellers of popcorn will:

(Figure: Tax on Consumers of Gadgets) According to thefigure, what is the amount of the tax that has been imposed ongadgets? Figure: Tax on Consumers of Gadgets

(Figure: Tax on Sellers) Refer to the figure. Suppose theimposition of a per-unit tax on sellers shifts the supply curvefrom S0 to S1. The equilibrium quantity sold under the tax is:

Figure: Tax on Sellers (Figure: Tax on Sellers) Refer to the figure. Suppose theimposition of a per-unit tax on sellers shifts the supply curvefrom S0 to S1. With the tax, buyers pay ________ and sellersreceive ________.

(Figure: Tax on Sellers of Gadgets) According to the figure,what is the amount of the tax that has been imposed on the saleof gadgets?

The question of who pays the greater amount of a commoditytax is determined by:

(Figure: Tax on Sellers) If a $3 tax per unit purchased wasplaced on buyers instead of sellers, buyers would pay ________and sellers would receive ________.

When a tax is imposed on consumers the demand curve will:

(Figure: Tax Imposed on Sellers) According to the figure, theprice that buyers pay AFTER the tax is imposed is:

A tax on sellers of apples:

(Figure: Tax on Sellers) Suppose the imposition of a per-unittax on sellers shifts the supply curve from S0 to S1. Using thefigure, calculate the amount of the tax.

Suppose there is a tax of $50 on bicycles. The supply curve forbicycles slopes upward. The demand curve for bicycles slopesdownward. Sellers are required by law to pay the tax. If the taxis reduced from $50 to $10 per bicycle, then the:

(Figure: Tax Imposed on Sellers) According to the figure, theprice that sellers receive AFTER the tax is imposed is:

If a tax is imposed on sellers of a product the demand curvewill:

A tax on the seller of a product:

Which of the following is correct concerning the burden of a taximposed on coffee mugs?

Figure: Tax on Sellers of Gadgets (Figure: Tax on Sellers of Gadgets) According to the figure,what is the tax revenue that the government collects from thetax on gadgets?

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 isthe final price per bag of apples received by sellers?

(Figure: Tax on Sellers of Gadgets) According to the figure,what is the amount of the deadweight loss caused by theimposition of the tax on gadgets?

(Figure: Tax on Sellers) Refer to the figure. Suppose theimposition of a per-unit tax on sellers shifts the supply curvefrom S0 to S₁. The equilibrium quantity sold under the tax is:

Figure: Tax on Sellers (Figure: Tax on Sellers) Refer to the figure. Suppose theimposition of a per-unit tax on sellers shifts the supply curvefrom S0 to S₁. With the tax, buyers pay and sellersreceive .

(Figure: Tax on Sellers) If a $3 tax per unit purchased wasplaced on buyers instead of sellers, buyers would pay and sellers would receive .

(Figure: Tax on Sellers) Suppose the imposition of a per-unittax on sellers shifts the supply curve from S0 to S₁. Using thefigure, calculate the amount of the tax.