Chapter 8 United States Labor Supply More Inelastic More

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subject Words 2744
subject Authors N. Gregory Mankiw

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Application: The Costs of Taxation 2229
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?
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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?
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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?
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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?
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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?
Figure 8-27
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39.
Refer to Figure 8-27. Suppose that Market A is characterized by Demand 1 and Supply 1, and
Market B is
characterized by Demand 2 and Supply 1. If an identical tax is imposed on each
market, the tax will create a larger
deadweight loss in which market? Explain.
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Application: The Costs of Taxation 2235
Figure 8-28
40.
Refer to Figure 8-28. Suppose that Market A is characterized by Demand 1 and Supply 1, and
Market B is
characterized by Demand 1 and Supply 2. If an identical tax is imposed on each
market, the tax will create a larger
deadweight loss in which market? Explain.
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41.
Provide several examples of important taxes on labor in the United States. For a typical worker,
what is the marginal
tax rate on labor income once all the labor taxes are summed?
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42.
Is the United States labor supply more inelastic or more elastic? Briefly summarize the
competing theories.
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43.
The demand for energy drinks is more elastic than the demand for milk. Would a tax on energy
drinks or a tax on
milk have a larger deadweight loss? Explain.
44.
Suppose that the market for product X is characterized by a typical, downward-sloping, linear
demand curve and a
typical, upward-sloping, linear supply curve. Suppose the price elasticity of
supply is 0.7. Will the deadweight loss
from a $3 tax per unit be smaller if the absolute value of
the price elasticity of demand is 0.6 or if the absolute value
of the price elasticity of demand is
1.5?
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45.
Suppose the demand curve and the supply curve in a market are both linear, and suppose the price
elasticity of
supply is 0.5. Will the deadweight loss from a $3 tax per unit be larger if the price
elasticity of demand is 0.3 or if the
price elasticity of demand is 0.7?
46.
Suppose that the market for product X is characterized by a typical, downward-sloping, linear
demand curve and a
typical, upward-sloping, linear supply curve. If a $2 tax per unit results in a
deadweight loss of $200, how large would
be the deadweight loss from a $4 tax per unit?
47.
Suppose that the market for product X is characterized by a typical, downward-sloping, linear
demand curve and a
typical, upward-sloping, linear supply curve. If a $2 tax per unit results in a
deadweight loss of $200, how large would
be the deadweight loss from a $6 tax per unit?
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48.
Suppose the demand curve and the supply curve in a market are both linear. If a $2 tax per unit
results in a
deadweight loss of $200, how large would be the deadweight loss from a $3 tax per
unit?
49.
Suppose the demand curve and the supply curve in a market are both linear. To begin, there was
a $5 tax per unit,
and the $5 tax resulted in a deadweight loss of $1,500. Now, the tax per unit is
higher, with the higher tax resulting in
a deadweight loss of $6,000. What is the amount of the
new tax per unit?
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Application: The Costs of Taxation 2241
Figure 8-29
50.
Refer to Figure 8-29. As the size of the tax increases from $3 to $6 to $9, what happens to tax
revenues?
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51.
Refer to Figure 8-29. As the size of the tax increases from $3 to $6 to $9, what happens to the
deadweight loss
from the tax?
52.
Refer to Figure 8-29. If you were a policymaker choosing between a $3, $6, or $9 tax, which
would you choose
and why?
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53.
Describe the Laffer curve.

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