Question 1

-The figure above shows the market for tires.According to the figure,the price elasticity of demand is ________ the price elasticity of supply.

Accepted Answer

The answer of 
-The figure above shows the market for...

Question 2

If the demand curve for a good is horizontal,a tax is levied on this product is

Accepted Answer

If the demand curve for a good is horizontal, it means that the buyers are very sensitive to changes in price, and any increase in price will cause them to demand a lesser quantity. This means that the sellers cannot increase the price of the product to offset the tax, and they will have to bear the burden of the tax themselves. Therefore, the tax will be paid entirely by the sellers.

Question 3

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of ________ per tire and that ________ pay most of the tax.

Accepted Answer

The answer of 
-The figure above shows the market for...

Question 4

The buyers pay all of a tax when the demand is

Accepted Answer

When the demand is perfectly inelastic, buyers have no alternative but to pay the tax since they are unable to reduce consumption of the good or service.

Question 5

-The figure above shows the market for tires.According to the figure,the government collects ________ per month in total tax revenue.

Accepted Answer

The answer of 
-The figure above shows the market for...

Question 6

-The figure above shows the market for tires.The government has imposed a tax on tires,and the sellers pay ________ of the tax.

Accepted Answer

The answer of 
-The figure above shows the market for...

Question 7

For a given supply elasticity,the more inelastic the demand for a good,the larger the share of the tax paid by the

Accepted Answer

When demand is inelastic, it means that consumers are less responsive to changes in price. Therefore, if a tax is imposed on the good, the price of the good will go up, but the quantity demanded will not decrease significantly. As a result, the burden of the tax falls more heavily on the buyers, who are willing to pay the higher price despite the tax, rather than on the sellers who can still sell their goods at the same price. Hence, the answer is A, buyers.

Question 8

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of ________ per tire.

Accepted Answer

The answer of 
-The figure above shows the market for...

Question 9

The demand for gasoline is inelastic and the supply of gasoline is elastic.Therefore,

Accepted Answer

When demand is inelastic and supply is elastic, the burden of the tax falls more on the consumers than on the producers. As the demand for gasoline is relatively unresponsive to price changes, consumers will continue to buy gasoline even at higher prices, resulting in a greater burden on them. Hence, the buyers bear most of the incidence of a tax on gasoline.

Question 10

Suppose the demand for specialty car license plates is perfectly inelastic and the supply curve for specialty license plates is upward sloping.A tax is imposed on specialty license plates.Which of the following is true?

Accepted Answer

When the demand for a good is perfectly inelastic, the buyers do not change the quantity demanded in response to a change in price. Therefore, the entire tax burden falls on the buyers or drivers in this case. Additionally, the upward sloping supply curve suggests that the tax will increase the price of the specialty license plates, further increasing the burden on the drivers who are willing to pay for them. Thus, drivers will pay all of the tax.

Question 11

-The above figure shows the market for gourmet ice cream.In effort to reduce obesity,government places a $2 tax per gallon on suppliers in this market,shifting the supply curve from S0 to S1.The total tax revenue is equal to

Accepted Answer

The tax revenue is equal to the tax per gallon multiplied by the number of gallons sold. The tax per gallon is $2, and the number of gallons sold is 200,000. Therefore, the total tax revenue is $2 * 200,000 = $400,000.

Question 12

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S0 to S1.The amount of this tax is ________ per bucket of golf balls.

Accepted Answer

The tax amount is the vertical distance between the original supply curve (S0) and the new supply curve (S1). If the supply curve shifts upward by $3, then the tax is $3 per bucket.

Question 13

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S0 to S1.The quantity of buckets without the tax is ________ and the quantity with the tax is ________.

Accepted Answer

The original supply curve S0 intersects the demand curve at a quantity of 600 buckets. After the tax, the new supply curve S1 intersects the demand curve at a quantity of 400 buckets.

Question 14

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S0 to S1.The tax incidence is

Accepted Answer

The answer of 
-The above figure shows the market for...

Question 15

-The above figure shows the market for gourmet ice cream.In effort to reduce obesity,government places a $2 tax per gallon on suppliers in this market,shifting the supply curve from S0 to S1.The tax incidence is

Accepted Answer

The tax incidence is split equally between consumers and producers, each paying $1 per gallon, as the supply curve shift indicates an equal burden shared by both parties.

Question 16

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S0 to S1.The total tax revenue is equal to

Accepted Answer

The total tax revenue is calculated by multiplying the tax per unit by the quantity sold after the tax is imposed. The shift from S0 to S1 indicates the tax per unit, and the new equilibrium quantity gives the quantity sold.

Question 17

If a tax is placed on suppliers of a good,then the incidence of the tax

Accepted Answer

The answer of If a tax is placed on suppliers...

Question 18

Suppose that the elasticity of demand for insulin is 0.1,the elasticity of demand for oranges is 1.2,and the elasticity of supply for insulin and oranges is 0.4.If the government imposes a 10 percent tax on both insulin and oranges,the decrease in the quantity of oranges is ________ the decrease in the quantity of insulin.

Accepted Answer

The size of the decrease in quantity depends on the magnitude of the elasticities and the size of the tax. Since the elasticity of demand for insulin is lower than that of oranges, the quantity of insulin is expected to decrease less than the quantity of oranges in absolute terms. Therefore, the decrease in quantity of oranges is larger than the decrease in quantity of insulin.

Question 19

-The figure above shows the market for tires.The government has imposed a tax on tires,and the buyers pay ________ of the tax.

Accepted Answer

The answer of 
-The figure above shows the market for...

Question 20

The demand for insulin is quite inelastic.The demand for Pepsi is quite elastic.Suppose the elasticity of supply for insulin is the same as the elasticity of supply for Pepsi.If a $0.20 tax was imposed on each of these goods (holding everything else constant),which consumers would pay more of the tax?

Accepted Answer

The demand for insulin is quite inelastic, meaning that consumers are less sensitive to changes in price, and therefore, more of the tax burden will fall on the insulin consumers. On the other hand, the demand for Pepsi is quite elastic, meaning that consumers are more sensitive to changes in price, and therefore, less of the tax burden will fall on the Pepsi consumers. Since the elasticity of supply for both goods is the same, it will not affect the incidence of the tax.

Quiz 7: Government Actions in Markets

-The figure above shows the market for tires.According to the figure,the price elasticity of demand is ________ the price elasticity of supply.

If the demand curve for a good is horizontal,a tax is levied on this product is

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of per tire and that pay most of the tax.

The buyers pay all of a tax when the demand is

-The figure above shows the market for tires.According to the figure,the government collects ________ per month in total tax revenue.

-The figure above shows the market for tires.The government has imposed a tax on tires,and the sellers pay ________ of the tax.

For a given supply elasticity,the more inelastic the demand for a good,the larger the share of the tax paid by the

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of ________ per tire.

The demand for gasoline is inelastic and the supply of gasoline is elastic.Therefore,

Suppose the demand for specialty car license plates is perfectly inelastic and the supply curve for specialty license plates is upward sloping.A tax is imposed on specialty license plates.Which of the following is true?

-The above figure shows the market for gourmet ice cream.In effort to reduce obesity,government places a $2 tax per gallon on suppliers in this market,shifting the supply curve from S0 to S1.The total tax revenue is equal to

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S0 to S1.The amount of this tax is ________ per bucket of golf balls.

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S0 to S1.The quantity of buckets without the tax is and the quantity with the tax is .

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S0 to S1.The tax incidence is

-The above figure shows the market for gourmet ice cream.In effort to reduce obesity,government places a $2 tax per gallon on suppliers in this market,shifting the supply curve from S0 to S1.The tax incidence is

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S0 to S1.The total tax revenue is equal to

If a tax is placed on suppliers of a good,then the incidence of the tax

-The figure above shows the market for tires.The government has imposed a tax on tires,and the buyers pay ________ of the tax.