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Subjective Short Answer
1. In terms of gains from trade, why is it true that taxes cause deadweight losses?
2. A tax is imposed on a certain good. The tax produces revenue of $5,000 for the government. The tax reduces consumer
surplus by $3,000 and it reduces producer surplus by $4,000. What is the amount of the deadweight loss of the tax?
Figure 8-25
3. Refer to Figure 8-25. What are the equilibrium price and equilibrium quantity in this market?
4. Refer to Figure 8-25. How much is consumer surplus at the market equilibrium?
5. Refer to Figure 8-25. How much is producer surplus at the market equilibrium?
6. Refer to Figure 8-25. How much is total surplus at the market equilibrium?
7. Refer to Figure 8-25. Suppose the government places a $4 tax per unit on this good. What price will consumers pay for
the good after the tax is imposed?
8. Refer to Figure 8-25. Suppose the government places a $4 tax per unit on this good. What price will sellers receive for
the good after the tax is imposed?
9. Refer to Figure 8-25. Suppose the government places a $4 tax per unit on this good. How many units of this good will
be bought and sold after the tax is imposed?
10. Refer to Figure 8-25. Suppose the government places a $4 tax per unit on this good. How much is consumer surplus
after the tax is imposed?
11. Refer to Figure 8-25. Suppose the government places a $4 tax per unit on this good. How much is producer surplus
after the tax is imposed?
12. Refer to Figure 8-25. Suppose the government places a $4 tax per unit on this good. How much tax revenue is
collected after the tax is imposed?
13. Refer to Figure 8-25. Suppose the government increases the size of the tax on this good from $4 per unit to $6 per
unit. Will the tax revenue collected from the tax increase, decrease, or stay the same?
14. Refer to Figure 8-25. Suppose the government places a $4 tax per unit on this good. How much is total surplus after
the tax is imposed?
15. Refer to Figure 8-25. Suppose the government places a $4 tax per unit on this good. How much is the deadweight
loss from this tax?
Scenario 8-3
Suppose the market demand and market supply curves are given by the equations:
16. Refer to Scenario 8-3. What are the equilibrium price and equilibrium quantity in this market?
17. Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes:
What price will sellers receive and what price will buyers pay after the tax is imposed?
18. Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes:
What quantity will be bought and sold after the tax is imposed?
19. Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes:
How much tax revenue will be collected after this tax is imposed?
20. Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes:
What will be the deadweight loss from this tax?
21. Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes:
If T = 40, what price will buyers pay and what price will sellers receive?
22. Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes:
If T = 40, how many units will be bought and sold after the tax is imposed?
23. Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes:
If T = 40, how much tax revenue will be collected from this tax?
24. Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes:
If T = 40, how much is the burden of the tax on the buyers and on the sellers?
25. Refer to Scenario 8-3. Suppose that a tax of T is placed on buyers so that the demand curve becomes:
If T = 40, how much will be the deadweight loss from this tax?
Figure 8-26
26. Refer to Figure 8-26. What are the equilibrium price and equilibrium quantity in this market?
27. Refer to Figure 8-26. How much is consumer surplus at the market equilibrium?
28. Refer to Figure 8-26. How much is producer surplus at the market equilibrium?
29. Refer to Figure 8-26. How much is total surplus at the market equilibrium?
30. Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. What price will consumers pay
for the good after the tax is imposed?
31. Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. What price will sellers receive
for the good after the tax is imposed?
32. Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. How many units of this good
will be bought and sold after the tax is imposed?
33. Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. How much is consumer surplus
after the tax is imposed?
34. Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. How much is producer surplus
after the tax is imposed?
35. Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. How much tax revenue is
collected after the tax is imposed?
36. Refer to Figure 8-26. Suppose the government increases the size of the tax on this good from $3 per unit to $6 per
unit. Will the tax revenue collected from the tax increase, decrease, or stay the same?
37. Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. How much is total surplus after
the tax is imposed?
38. Refer to Figure 8-26. Suppose the government places a $3 tax per unit on this good. How much is the deadweight
loss from this tax?
