Question 1

Figure 4-25
 
-Refer to Figure 4-25. The equilibrium price before the tax is imposed is

Accepted Answer

The answer of Figure 4-25
 
-Refer to Figure 4-25. The...

Question 2

Figure 4-25
 
-Refer to Figure 4-25. After the tax is levied, producer surplus is represented by area

Accepted Answer

The answer of Figure 4-25
 
-Refer to Figure 4-25. After...

Question 3

Figure 4-25
 
-Refer to Figure 4-25. The benefit to the government is

Accepted Answer

The answer of Figure 4-25
 
-Refer to Figure 4-25. The...

Question 4

Figure 4-24
 
-Refer to Figure 4-24. The per-unit burden of the tax on sellers is

Accepted Answer

The answer of Figure 4-24
 
-Refer to Figure 4-24. The...

Question 5

The average tax rate (ATR) is defined as

Accepted Answer

The average tax rate (ATR) is calculated by dividing the total tax liability by the taxable income. This calculation gives a percentage that helps to understand the effective tax rate that one pays on their income. Therefore, the correct answer is C, tax liability divided by taxable income.

Question 6

Figure 4-25
 
-Refer to Figure 4-25. The tax causes a reduction in producer surplus that is represented by area

Accepted Answer

The answer of Figure 4-25
 
-Refer to Figure 4-25. The...

Question 7

An increase in the demand for a product will cause output to

Accepted Answer

An increase in demand will lead to an increase in output as producers will need to increase production to meet the higher demand. As a result, the demand for resources used to produce the product will also increase, which will drive up their prices due to the increase in demand.

Question 8

Figure 4-25
 
-Refer to Figure 4-25. The price that buyers pay after the tax is imposed is

Accepted Answer

The answer of Figure 4-25
 
-Refer to Figure 4-25. The...

Question 9

Figure 4-24
 
-Refer to Figure 4-24. The per unit burden of the tax on buyers is

Accepted Answer

The per unit burden of the tax on buyers is equal to the difference between the price paid by buyers before the tax (P₂) and the price received by sellers after the tax (P₃). Therefore, the correct answer is P₃ - P₂.

Question 10

Figure 4-25
 
-Refer to Figure 4-25. The price that sellers receive after the tax is imposed is

Accepted Answer

Before the tax, the equilibrium price is P₀ and equilibrium quantity is Q₀. After the tax, the new supply curve shifts upward by the amount of the tax (represented by the vertical distance between P₀ and P₁), causing the new equilibrium point to be at point E₁. At this new equilibrium, the price paid by buyers is P₂ and the price received by sellers (after the tax) is P₁. Therefore, the correct answer is B.

Question 11

Figure 4-25
 
-Refer to Figure 4-25. Producer surplus before the tax was levied is represented by area

Accepted Answer

The answer of Figure 4-25
 
-Refer to Figure 4-25. Producer...

Question 12

Figure 4-24
 
-Refer to Figure 4-24. The amount of deadweight loss associated with the tax is equal to

Accepted Answer

Deadweight loss is the area between the supply and demand curves from the new equilibrium quantity to the old equilibrium quantity, excluding the area of the tax revenue triangle (P₃ A B). Therefore, the deadweight loss is equal to the area of triangle A B C.

Question 13

Figure 4-25
 
-Refer to Figure 4-25. Consumer surplus before the tax was levied is represented by area

Accepted Answer

The answer of Figure 4-25
 
-Refer to Figure 4-25. Consumer...

Question 14

Figure 4-25
 
-Refer to Figure 4-25. The tax causes a reduction in consumer surplus that is represented by area

Accepted Answer

The answer of Figure 4-25
 
-Refer to Figure 4-25. The...

Question 15

Figure 4-24
 
-Refer to Figure 4-24. The amount of the tax on each unit of the good is

Accepted Answer

The answer of Figure 4-24
 
-Refer to Figure 4-24. The...

Question 16

Figure 4-24
 
-Refer to Figure 4-24. The amount of tax revenue received by the government is equal to the area

Accepted Answer

The answer of Figure 4-24
 
-Refer to Figure 4-24. The...

Question 17

During the imposition of price controls in the 1970s, long gasoline lines were common. In the absence of price controls, markets would have eliminated such excess demand by

Accepted Answer

In a free market, when demand exceeds supply, the price tends to rise to balance the market. This encourages those who value the good or service more to purchase it, while discouraging those who do not value it as highly. Therefore, by allowing the price to rise, markets would have eliminated excess demand for gasoline and prevented long lines.

Question 18

If an increase in the government-imposed minimum wage pushes the price (wage) of unskilled labor above market equilibrium, which of the following will most likely occur in the unskilled labor market?

Accepted Answer

When the government-imposed minimum wage pushes the price of unskilled labor above market equilibrium, it creates a surplus of unskilled labor because the quantity of labor supplied by workers will exceed the quantity of labor demanded by employers. This surplus results in unemployment or underemployment among unskilled workers, and employers may be less willing to hire them. Therefore, D (a surplus of unskilled labor) is the most likely to occur in the unskilled labor market.

Question 19

Which of the following is a true statement regarding the economic impact of a subsidy?

Accepted Answer

The answer of Which of the following is a true...

Question 20

Figure 4-25
 
-Refer to Figure 4-25. After the tax is levied, consumer surplus is represented by area

Accepted Answer

The answer of Figure 4-25
 
-Refer to Figure 4-25. After...

Quiz 4: B : Supply and Demand: Applications and Extensions

Figure 4-25 -Refer to Figure 4-25. The equilibrium price before the tax is imposed is

Figure 4-25 -Refer to Figure 4-25. After the tax is levied, producer surplus is represented by area

Figure 4-25 -Refer to Figure 4-25. The benefit to the government is

Figure 4-24 -Refer to Figure 4-24. The per-unit burden of the tax on sellers is

The average tax rate (ATR) is defined as

Figure 4-25 -Refer to Figure 4-25. The tax causes a reduction in producer surplus that is represented by area

An increase in the demand for a product will cause output to

Figure 4-25 -Refer to Figure 4-25. The price that buyers pay after the tax is imposed is

Figure 4-24 -Refer to Figure 4-24. The per unit burden of the tax on buyers is

Figure 4-25 -Refer to Figure 4-25. The price that sellers receive after the tax is imposed is

Figure 4-25 -Refer to Figure 4-25. Producer surplus before the tax was levied is represented by area

Figure 4-24 -Refer to Figure 4-24. The amount of deadweight loss associated with the tax is equal to

Figure 4-25 -Refer to Figure 4-25. Consumer surplus before the tax was levied is represented by area

Figure 4-25 -Refer to Figure 4-25. The tax causes a reduction in consumer surplus that is represented by area

Figure 4-24 -Refer to Figure 4-24. The amount of the tax on each unit of the good is

Figure 4-24 -Refer to Figure 4-24. The amount of tax revenue received by the government is equal to the area

During the imposition of price controls in the 1970s, long gasoline lines were common. In the absence of price controls, markets would have eliminated such excess demand by

If an increase in the government-imposed minimum wage pushes the price (wage) of unskilled labor above market equilibrium, which of the following will most likely occur in the unskilled labor market?

Which of the following is a true statement regarding the economic impact of a subsidy?

Figure 4-25 -Refer to Figure 4-25. After the tax is levied, consumer surplus is represented by area