1. If the government removes a tax on a good, then the quantity of the good sold will
a.
increase.
b.
decrease.
c.
not change.
d.
All of the above are possible.
2. 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 increase.
b.
increase, and the price received by sellers will decrease.
c.
decrease, and the price received by sellers will increase.
d.
decrease, and the price received by sellers will decrease.
3. A tax on the sellers of coffee mugs
a.
b.
c.
d.
4. When a tax is placed on the sellers of a product, buyers pay
a.
more, and sellers receive more than they did before the tax.
b.
more, and sellers receive less than they did before the tax.
c.
less, and sellers receive more than they did before the tax.
d.
less, and sellers receive less than they did before the tax.
5. A tax on the sellers of coffee will increase the price of coffee paid by buyers,
a.
increase the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.
b.
increase the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.
c.
decrease the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.
d.
decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.
6. A tax imposed on the sellers of a good will raise the
a.
price paid by buyers and lower the equilibrium quantity.
b.
price paid by buyers and raise the equilibrium quantity.
c.
effective price received by sellers and lower the equilibrium quantity.
d.
effective price received by sellers and raise the equilibrium quantity.
7. A tax imposed on the sellers of a good will lower the
a.
price paid by buyers and lower the equilibrium quantity.
b.
price paid by buyers and raise the equilibrium quantity.
c.
effective price received by sellers and lower the equilibrium quantity.
d.
effective price received by sellers and raise the equilibrium quantity.
8. A tax imposed on the sellers of a good will
a.
raise both the price buyers pay and the effective price sellers receive.
b.
raise the price buyers pay and lower the effective price sellers receive.
c.
lower the price buyers pay and raise the effective price sellers receive.
d.
lower both the price buyers pay and the effective price sellers receive.
9. If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would
a.
increase by more than $1,000.
b.
increase by exactly $1,000.
c.
increase by less than $1,000.
d.
decrease by an indeterminate amount.
10. 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 exactly $500.
c.
decrease by more than $500.
d.
increase by an indeterminate amount.
11. When a tax is placed on the sellers of cell phones, the size of the cell phone market
a.
and the effective price received by sellers both increase.
b.
increases, but the effective price received by sellers decreases.
c.
decreases, but the effective price received by sellers increases.
d.
and the effective price received by sellers both decrease.
12. When a tax is placed on the sellers of cell phones, the size of the cell phone market
a.
and the price paid by buyers both increase.
b.
increases, but the price paid by buyers decreases.
c.
decreases, but the price paid by buyers increases.
d.
and the price paid by buyers both decrease.
13. If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell,
then
a.
the supply curve for mopeds shifts downward by $200.
b.
sellers of mopeds receive $200 less per moped than they were receiving before the tax.
c.
buyers of mopeds are unaffected by the tax.
d.
None of the above is correct.
14. Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further,
suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements
is correct?
a.
The effective price received by sellers is $0.40 per bottle less than it was before the tax.
b.
Sixty percent of the burden of the tax falls on sellers.
c.
This tax causes the demand curve for perfume to shift downward by $1.00 at each quantity of perfume.
d.
All of the above are correct.
15. When a tax is levied on sellers of tea,
a.
the well-being of both sellers and buyers of tea is unaffected.
b.
sellers of tea are made worse off, and the well-being of buyers is unaffected.
c.
sellers of tea are made worse off, and buyers of tea are made better off.
d.
both sellers and buyers of tea are made worse off.
16. If a tax is levied on the sellers of a product, then the demand curve will
a.
shift down.
b.
shift up.
c.
become flatter.
d.
not shift.
17. If a tax is levied on the sellers of a product, then there will be a(n)
a.
downward shift of the demand curve.
b.
upward shift of the demand curve.
c.
decrease in quantity demanded.
d.
increase in quantity demanded.
18. If a tax is levied on the sellers of a product, then the supply curve will
a.
shift up.
b.
shift down.
c.
become flatter.
d.
not shift.
19. If a tax is levied on the sellers of a product, then there will be a(n)
a.
downward shift of the supply curve.
b.
upward shift of the supply curve.
c.
decrease in quantity supplied.
d.
increase in quantity supplied.
20. A tax on the buyers of cameras encourages
a.
sellers to supply a smaller quantity at every price.
b.
buyers to demand a smaller quantity at every price.
c.
sellers to supply a larger quantity at every price.
d.
Both a) and b) are correct.
21. A tax levied on the sellers of blueberries
a.
increases sellers’ costs, reduces profits, and shifts the supply curve up.
b.
increases sellers’ costs, reduces profits, and shifts the supply curve down.
c.
decreases sellers’ costs, increases profits, and shifts the supply curve up.
d.
decreases sellers’ costs, increases profits, and shifts the supply curve down.
22. A tax on sellers will shift the
a.
demand curve upward by the amount of the tax.
b.
demand curve downward by the amount of the tax.
c.
supply curve upward by the amount of the tax.
d.
supply curve downward by the amount of the tax.
23. When a tax is imposed on the sellers of a good, the supply curve shifts
a.
upward by the amount of the tax.
b.
downward by the amount of the tax.
c.
upward by less than the amount of the tax.
d.
downward by less than the amount of the tax.
24. A $2.00 tax levied on the sellers of birdhouses will shift the supply curve
a.
upward by exactly $2.00.
b.
upward by less than $2.00.
c.
downward by exactly $2.00.
d.
downward by less than $2.00.
25. A $0.10 tax levied on the sellers of chocolate bars will cause the
a.
supply curve for chocolate bars to shift down by $0.10.
b.
supply curve for chocolate bars to shift up by $0.10.
c.
demand curve for chocolate bars to shift down by $0.10.
d.
demand curve for chocolate bars to shift up by $0.10.
26. When a tax is placed on the sellers of a product, the
a.
size of the market decreases.
b.
effective price received by sellers decreases, and the price paid by buyers increases.
c.
supply of the product decreases.
d.
All of the above are correct.
27. Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax
to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the
a.
demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20.
b.
demand curve will shift upward by $20, and the price paid by buyers will decrease by $20.
c.
supply curve will shift downward by $20, and the effective price received by sellers will increase by less than
$20.
d.
supply curve will shift downward by $20, and the effective price received by sellers will increase by $20.
28. Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax
to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the
a.
demand curve will shift upward by $20, and the effective price received by sellers will increase by $20.
b.
demand curve will shift upward by $20, and the effective price received by sellers will increase by less than
$20.
c.
supply curve will shift downward by $20, and the price paid by buyers will decrease by $20.
d.
supply curve will shift downward by $20, and the price paid by buyers will decrease by less than $20.
29. Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further,
suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is
correct?
a.
This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor.
b.
The effective price received by sellers is $5.00 per bottle less than it was before the tax.
c.
Forty percent of the burden of the tax falls on buyers.
d.
All of the above are correct.
30. A tax on the buyers of sofas
a.
increases the size of the sofa market.
b.
decreases the size of the sofa market.
c.
has no effect on the size of the sofa market.
d.
may increase, decrease, or have no effect on the size of the sofa market.
31. When a tax is placed on the buyers of a product, buyers pay
a.
more and sellers receive more than they did before the tax.
b.
more and sellers receive less than they did before the tax.
c.
less and sellers receive more than they did before the tax.
d.
less and sellers receive less than they did before the tax.
32. A tax on the buyers of cereal will increase the price of cereal paid by buyers,
a.
decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal.
b.
decrease the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal.
c.
increase the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal.
d.
increase the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal.
33. A tax imposed on the buyers of a good will raise the
a.
price paid by buyers and lower the equilibrium quantity.
b.
price paid by buyers and raise the equilibrium quantity.
c.
effective price received by sellers and lower the equilibrium quantity.
d.
effective price received by sellers and raise the equilibrium quantity.
34. A tax imposed on the buyers of a good will lower the
a.
price paid by buyers and lower the equilibrium quantity.
b.
price paid by buyers and raise the equilibrium quantity.
c.
effective price received by sellers and lower the equilibrium quantity.
d.
effective price received by sellers and raise the equilibrium quantity.
35. A tax imposed on the buyers of a good will
a.
raise both the price buyers pay and the effective price sellers receive.
b.
raise the price buyers pay and lower the effective price sellers receive.
c.
lower the price buyers pay and raise the effective price sellers receive.
d.
lower both the price buyers pay and the effective price sellers receive.
36. 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 less than $5.
b.
increase by exactly $5.
c.
increase by more than $5.
d.
decrease by an indeterminate amount.
37. If the government levies a $0.25 tax per MP3 music file downloaded on buyers of MP3 music files, then the price
received by sellers of MP3 music files would
a.
decrease by more than $0.25.
b.
decrease by exactly $0.25.
c.
decrease by less than $0.25.
d.
increase by an indeterminate amount.
38. If the government levies a $5 tax per MP3 player on buyers of MP3 players, then the price paid by buyers of MP3
players would likely
a.
increase by more than $5.
b.
increase by exactly $5.
c.
increase by less than $5.
d.
decrease.
39. When a tax is placed on the buyers of cell phones, the size of the cell phone market
a.
and the effective price received by sellers both decrease.
b.
decreases, but the effective price received by sellers increases.
c.
increases, but the effective price received by sellers decreases.
d.
and the effective price received by sellers both increase.
40. When a tax is placed on the buyers of tennis racquets, the size of the tennis racquet market
a.
and the price paid by buyers both decrease.
b.
decreases, but the price paid by buyers increases.
c.
increases, but the price paid by buyers decreases.
d.
and the price paid by buyers both increase.
41. Suppose buyers of vodka are required to send $5.00 to the government for every bottle of vodka they buy. Further,
suppose this tax causes the effective price received by sellers of vodka to fall by $3.00 per bottle. Which of the following
statements is correct?
a.
This tax causes the demand curve for vodka to shift downward by $5.00 at each quantity of vodka.
b.
The price paid by buyers is $2.00 per bottle more than it was before the tax.
c.
Sixty percent of the burden of the tax falls on sellers.
d.
All of the above are correct.
42. When a tax is levied on buyers of tea,
a.
buyers of tea and sellers of tea both are made worse off.
b.
buyers of tea are made worse off, and the well-being of sellers is unaffected.
c.
buyers of tea are made worse off, and sellers of tea are made better off.
d.
the well-being of both buyers of tea and sellers of tea is unaffected.
43. If a tax is levied on the buyers of a product, then the demand curve will
a.
not shift.
b.
shift down.
c.
shift up.
d.
become flatter.
44. If a tax is levied on the buyers of a product, then there will be a(n)
a.
upward shift of the demand curve.
b.
downward shift of the demand curve.
c.
movement up and to the left along the demand curve.
d.
movement down and to the right along the demand curve.
45. A tax on the buyers of personal computer external hard drives encourages
a.
sellers to supply a smaller quantity at every price.
b.
buyers to demand a smaller quantity at every price.
c.
buyers to demand a larger quantity at every price.
d.
Both a) and b) are correct.
46. A tax on buyers will shift the
a.
demand curve upward by the amount of the tax.
b.
demand curve downward by the amount of the tax.
c.
supply curve upward by the amount of the tax.
d.
supply curve downward by the amount of the tax.
47. When a tax is imposed on the buyers of a good, the demand curve shifts
a.
upward by the amount of the tax.
b.
downward by the amount of the tax.
c.
upward by less than the amount of the tax.
d.
downward by less than the amount of the tax.
48. A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve
a.
upward by exactly $1.50.
b.
upward by less than $1.50.
c.
downward by exactly $1.50.
d.
downward by less than $1.50.
49. A $5 tax levied on the buyers of pants will cause the
a.
supply curve for pants to shift down by $5.
b.
supply curve for pants to shift up by $5.
c.
demand curve for pants to shift down by $5.
d.
demand curve for pants to shift up by $5.
50. When a tax is placed on the buyers of a product, the
a.
size of the market decreases.
b.
effective price received by sellers decreases, and the price paid by buyers increases.
c.
demand for the product decreases.
d.
All of the above are correct.
51. If the government passes a law requiring buyers of college textbooks to send $5 to the government for every textbook
they buy, then
a.
the demand curve for textbooks shifts downward by $5.
b.
buyers of textbooks pay $5 more per textbook than they were paying before the tax.
c.
sellers of textbooks are unaffected by the tax.
d.
All of the above are correct.
52. Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax
to the government. If the tax is reduced from $50 per ticket to $20 per ticket, then the
a.
demand curve will shift upward by $30, and the price paid by buyers will decrease by less than $30.
b.
demand curve will shift upward by $30, and the price paid by buyers will decrease by $30.
c.
supply curve will shift downward by $30, and the effective price received by sellers will increase by less than
$30.
d.
supply curve will shift downward by $30, and the effective price received by sellers will increase by $30.
53. Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax
to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the
a.
demand curve will shift upward by $20, and the effective price received by sellers will increase by $20.
b.
demand curve will shift upward by $20, and the effective price received by sellers will increase by less than
$20.
c.
supply curve will shift downward by $20, and the price paid by buyers will decrease by $20.
d.
supply curve will shift downward by $20, and the price paid by buyers will decrease by less than $20.
54. Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy.
Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which
of the following statements is correct?
a.
This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity.
b.
The price paid by buyers is $0.30 per drink more than it was before the tax.
c.
Forty percent of the burden of the tax falls on sellers.
d.
All of the above are correct.
55. If a tax is levied on the buyers of a product, then the supply curve will
a.
not shift.
b.
shift up.
c.
shift down.
d.
become flatter.
56. If a tax is levied on the buyers of a product, then there will be a(n)
a.
downward shift of the supply curve.
b.
upward shift of the supply curve.
c.
movement up and to the right along the supply curve.
d.
movement down and to the left along the supply curve.
57. Which of the following is not correct?
a.
Taxes levied on sellers and taxes levied on buyers are not equivalent.
b.
A tax places a wedge between the price that buyers pay and the price that sellers receive.
c.
The wedge between the buyers’ price and the sellers’ price is the same, regardless of whether the tax is levied
on buyers or sellers.
d.
In the new after-tax equilibrium, buyers and sellers share the burden of the tax.
58. If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the
price paid by buyers will
a.
increase, and the price received by sellers will increase.
b.
increase, and the price received by sellers will not change.
c.
not change, and the price received by sellers will increase.
d.
not change, and the price received by sellers will not change.
59. If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price
paid by buyers will
a.
not change, and the price received by sellers will not change.
b.
not change, and the price received by sellers will decrease.
c.
decrease, and the price received by sellers will not change.
d.
decrease, and the price received by sellers will decrease.
60. If the government wants to reduce smoking, it should impose a tax on
a.
buyers of cigarettes.
b.
sellers of cigarettes.
c.
either buyers or sellers of cigarettes.
d.
whichever side of the market is less elastic.
61. If the government wants to reduce the burning of fossil fuels, it should impose a tax on
a.
buyers of gasoline.
b.
sellers of gasoline.
c.
either buyers or sellers of gasoline.
d.
whichever side of the market is less elastic.
62. The term tax incidence refers to
a.
whether buyers or sellers of a good are required to send tax payments to the government.
b.
whether the demand curve or the supply curve shifts when the tax is imposed.
c.
the distribution of the tax burden between buyers and sellers.
d.
widespread view that taxes (and death) are the only certainties in life.
63. When a tax is placed on the buyers of lemonade, the
a.
sellers bear the entire burden of the tax.
b.
buyers bear the entire burden of the tax.
c.
burden of the tax will be always be equally divided between the buyers and the sellers.
d.
burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always
equal.
64. Which of the following statements is correct concerning the burden of a tax imposed on take-out food?
a.
Buyers bear the entire burden of the tax.
b.
Sellers bear the entire burden of the tax.
c.
Buyers and sellers share the burden of the tax.
d.
We have to know whether it is the buyers or the sellers that are required to pay the tax to the government in
order to make this determination.
65. The tax incidence
a.
is the manner in which the burden of a tax is shared among participants in a market.
b.
can be shifted to the buyer by imposing the tax on the buyers of a product in a market.
c.
can be shifted to the seller by imposing the tax on the sellers of a product in a market.
d.
All of the above are correct.
66. How is the burden of a tax divided?
(i)
When the tax is levied on the sellers, the sellers bear a higher proportion of the tax
burden.
(ii)
When the tax is levied on the buyers, the buyers bear a higher proportion of the tax
burden.
(iii)
Regardless of whether the tax is levied on the buyers or the sellers, the buyers and
sellers bear an equal proportion of the tax burden.
(iv)
Regardless of whether the tax is levied on the buyers or the sellers, the buyers and
sellers bear some proportion of the tax burden.
a.
(i) and (ii) only
b.
(iv) only
c.
(i), (ii), and (iii) only
d.
(i), (ii), and (iv) only
67. When a tax is placed on the sellers of energy drinks, the
a.
sellers bear the entire burden of the tax.
b.
buyers bear the entire burden of the tax.
c.
burden of the tax will be always be equally divided between the buyers and the sellers.
d.
burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always
equal.
68. If a tax is levied on the sellers of flour, then
a.
buyers will bear the entire burden of the tax.
b.
sellers will bear the entire burden of the tax.
c.
buyers and sellers will share the burden of the tax.
d.
the government will bear the entire burden of the tax.
69. Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages. The tax would shift
a.
demand, raising both the equilibrium price and quantity in the market for artificially-sweetened beverages.
b.
demand, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially-
sweetened beverages.
c.
supply, raising the equilibrium price and lowering the equilibrium quantity in the market for artificially-
sweetened beverages.
d.
supply, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially-
sweetened beverages.
70. Suppose the government imposes a 30-cent tax on the sellers of soft drinks. Which of the following is not correct? The
tax would
a.
shift the supply curve upward by 30 cents.
b.
raise the equilibrium price by 30 cents.
c.
reduce the equilibrium quantity.
d.
discourage market activity.
71. Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would
a.
shift the supply curve upward by less than 50 cents.
b.
raise the equilibrium price by 50 cents.
c.
create a 50-cent tax burden each for buyers and sellers.
d.
discourage market activity.
72. Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs. Which of the following is
not correct? The tax would
a.
shift the demand curve downward by 25 cents.
b.
lower the equilibrium price by 25 cents.
c.
reduce the equilibrium quantity.
d.
discourage market activity.