The number of seats in a football stadium is fixed at 70,000. The city decides to
impose a tax of $10 per ticket. In response, the team management raises the
ticket price from $30 to $40 and still sells all 70,000 tickets. The tax caused a
change in the consumer surplus of ________, a change in the producer surplus of
________, and a deadweight loss of ________.
Answer –$10; $0; $10
105. Multiple Choice: Excise taxes that raise the most reve…
Question Excise taxes that raise the most revenue and cause the least deadweight loss are
likely to be those that are imposed on goods for which:
Answer demand is inelastic and supply is elastic.
106. Multiple Choice: The governor wants to impose a $1 exc...
Question The governor wants to impose a $1 excise tax on some good—he doesn’t care
which—but he does want to minimize the deadweight loss. The deadweight loss
will be least when:
Answer both demand and supply curves are elastic.
107. Multiple Choice: The 1990 “yacht tax” caus…
Question The 1990 “yacht tax” caused a large deadweight loss, because demand for luxury
yachts made in the United States is:
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108. Multiple Choice: Which of the following statements abo…
Question Which of the following statements about the effects of an excise tax is incorrect?
109. Multiple Choice: If the government wants to minimize t...
Question If the government wants to minimize the deadweight loss from taxes, it should
impose taxes on goods for which:
110. Multiple Choice: If the government imposes an excise t...
Question If the government imposes an excise tax in a market in which the demand curve is
perfectly inelastic, the burden of the tax will fall completely on the ________, and
the deadweight loss will equal ________.
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111. Multiple Choice: If the government imposes an excise t...
Question If the government imposes an excise tax in a market in which the supply curve is
perfectly inelastic, the burden of the tax will fall completely on the ________ and
the deadweight loss will equal ________.
Answer consumers; zero
112. Multiple Choice: If you want to reduce the inefficienc...
Question If you want to reduce the inefficiency costs of taxation, you should devise taxes to
fall on goods for which the supply is ________ and the demand is ________.
Answer elastic; elastic
113. Multiple Choice: If the purpose of a tax is to decreas…
Question If the purpose of a tax is to decrease the amount of a harmful activity, such as
underage drinking, the government should impose it on harmful activities whose
supply is ________ and the demand is ________.
114. Multiple Choice: Given any downward-sloping demand cur...
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Question Given any downward–sloping demand curve for a good, the more price-elastic the
supply curve, the ________ equilibrium output will fall and the ________ will be the
deadweight loss when the government imposes an excise tax.
115. Multiple Choice: Given any downward-sloping demand cur...
Question Given any downward–sloping demand curve for a good, the more inelastic the
supply curve, the ________ equilibrium output will fall and the ________ will be the
deadweight loss when the government imposes an excise tax.
116. Multiple Choice: Given any upward-sloping supply curve…
Question Given any upward-sloping supply curve for a good, the more elastic the demand
curve, the ________ equilibrium output will fall and the ________ will be the
deadweight loss when the government imposes an excise tax.
117. Multiple Choice: Given any upward-sloping supply curve…
Question Given any upward-sloping supply curve for a good, the more inelastic the demand
curve, the ________ equilibrium output will fall and the ________ will be the
deadweight loss when the government imposes an excise tax.
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118. Multiple Choice: An analysis of the effect of excise t...
Question An analysis of the effect of excise taxes on markets allows us to conclude that:
Answer when the price elasticity of supply is equal to zero, an excise tax falls entirely
on the consumers.
119. Multiple Choice: The deadweight loss from an excise ta...
Question The deadweight loss from an excise tax is largest if demand:
Answer is elastic and supply is inelastic.
120. Multiple Choice: Suppose the demand for good X is perf…
Question Suppose the demand for good X is perfectly inelastic and a tax is levied on the
producers of each unit. Which of the following is a result of this tax?
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121. Multiple Choice: To minimize deadweight loss, markets ...
Question To minimize deadweight loss, markets where demand is relatively ________ and
supply is relatively ________ should be taxed.
Answer elastic; inelastic
122. Multiple Choice: If demand is inelastic, then deadweig...
Question If demand is inelastic, then deadweight loss will:
123. Multiple Choice: Figure: The Market for Hamburgers Ref…
Question
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Figure: The Market for Hamburgers
Reference: Ref 7-10
(Figure: The Market for Hamburgers) Look at the figure The Market for Hamburgers.
If the market is originally in equilibrium and the government imposes an excise tax
of $0.80 per unit of the good sold, consumer surplus will be reduced by:
124. Multiple Choice: Figure: The Market for Hamburgers Ref…
Question
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Figure: The Market for Hamburgers
Reference: Ref 7-10
(Figure: The Market for Hamburgers) Look at the figure The Market for Hamburgers.
If the market is originally in equilibrium and the government imposes an excise tax
of $0.80 per hamburger, producer surplus will be reduced by:
125. Multiple Choice: Figure: The Market for Hamburgers Ref…
Question
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Figure: The Market for Hamburgers
Reference: Ref 7-10
(Figure: The Market for Hamburgers) Look at the figure The Market for Hamburgers.
If the market is originally in equilibrium and the government imposes an excise tax
of $0.80 per unit of the good sold, the deadweight loss associated with the tax will
be:
126. Multiple Choice: Figure: The Market for Hamburgers Ref…
Question
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Figure: The Market for Hamburgers
Reference: Ref 7-10
(Figure: The Market for Hamburgers) Look at the figure The Market for Hamburgers.
If the market is originally in equilibrium and the government imposes an excise tax
of $0.80 per unit of the good sold, the government’s revenue from the tax will be:
127. Multiple Choice: When the government imposes an excise…
Question When the government imposes an excise tax in the market, the resulting
deadweight loss will:
Answer equal the tax revenue paid to the government.
128. Multiple Choice: Figure: The Market for Music Download...
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Question Figure: The Market for Music Downloads
Reference: Ref 7-11
(Figure: The Market for Music Downloads) Look at the graph The Market for Music
Downloads. If the government imposes a tax of $3 in this market, the government
will receive tax revenue of:
Answer $20.
129. Multiple Choice: Figure: The Market for Music Download...
Question
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Figure: The Market for Music Downloads
Reference: Ref 7-11
(Figure: The Market for Music Downloads) Look at the graph The Market for Music
Downloads. If the government imposes a tax of $3 in this market, the deadweight
loss will equal:
Answer $0.
130. Multiple Choice: Figure: The Market for Yachts Referen...
Question
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Figure: The Market for Yachts
Reference: Ref 7-12
(Figure: The Market for Yachts) Look at the figure The Market for Yachts. If the
government imposes a $30,000 tax on yachts (collected from the producers), the
price of yachts will rise to ________ and the government will collect tax revenue
equal to ________.
Answer $100,000; $120 million
131. Multiple Choice: Figure: The Market for Yachts Referen...
Question
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Figure: The Market for Yachts
Reference: Ref 7-12
(Figure: The Market for Yachts) Look at the figure The Market for Yachts. If the
government imposes a $30,000 tax on yachts (collected from the producers),
consumers will pay ________ of the tax and producers will pay ________.
132. Multiple Choice: A tax:
Question A tax:
133. Multiple Choice: Figure: The Market for Blue Jeans Ref…
Question
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Figure: The Market for Blue Jeans
Reference: Ref 7-13
(Figure: The Market for Blue Jeans) Look at the figure The Market for Blue Jeans.
The government recently levied a $10 tax on the producers of blue jeans. What
area or areas in the graph identify tax revenue?
134. Multiple Choice: Figure: The Market for Blue Jeans Ref…
Question Figure: The Market for Blue Jeans
Reference: Ref 7-13
(Figure: The Market for Blue Jeans) Look at the figure The Market for Blue Jeans.
The government recently levied a $10 tax on the producers of blue jeans. What
area or areas in the graph identify consumer and producer surplus after the tax was
levied?
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Answer a + b + c
135. Multiple Choice: Figure: The Market for Blue Jeans Ref…
Question Figure: The Market for Blue Jeans
Reference: Ref 7-13
(Figure: The Market for Blue Jeans) Look at the figure The Market for Blue Jeans.
The government recently levied a $10 tax on the producers of blue jeans. What
area or areas in the graph identify deadweight loss?
Answer a + b + c
136. Multiple Choice: Figure: The Market for Blue Jeans Ref…
Question
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Figure: The Market for Blue Jeans
Reference: Ref 7-13
(Figure: The Market for Blue Jeans) Look at the figure The Market for Blue Jeans.
The government recently levied a $10 tax on the producers of blue jeans. What
area or areas in the graph identify the loss of consumer surplus due to the tax?
Answer c
137. Multiple Choice: Figure: The Market for Blue Jeans Ref…
Question Figure: The Market for Blue Jeans
Reference: Ref 7-13
(Figure: The Market for Blue Jeans) Look at the figure The Market for Blue Jeans.
The government recently levied a $10 tax on the producers of blue jeans. What
area or areas in the graph identify the loss of producer surplus due to the tax?
Answer d + e
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138. Multiple Choice: Figure: The Market for Blue Jeans Ref…
Question Figure: The Market for Blue Jeans
Reference: Ref 7-13
(Figure: The Market for Blue Jeans) Look at the figure The Market for Blue Jeans.
The government recently levied a $10 tax on the producers of blue jeans. What is
the deadweight loss?
Answer $1,000
139. Multiple Choice: Figure: The Market for Blue Jeans Ref…
Question
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Figure: The Market for Blue Jeans
Reference: Ref 7-13
(Figure: The Market for Blue Jeans) Look at the figure The Market for Blue Jeans.
The government recently levied a $10 tax on the producers of blue jeans. What is
the the tax revenue?
140. Multiple Choice: The two principles of tax fairness are:
Question The two principles of tax fairness are:
Answer the minimize-distortions principle and the maximize-revenue principle.
141. Multiple Choice: The ability-to-pay principle says that:
Question The ability-to-pay principle says that:
Answer the amount of tax paid depends on the measure of value.
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142. Multiple Choice: A lump-sum tax, such as the fee for a…
Question A lump-sum tax, such as the fee for a driver’s license, does not take into
consideration:
Answer efficiency.
143. Multiple Choice: Which of the following situations pro...
Question Which of the following situations provides an example of the benefits principle?
Answer Employed workers pay taxes that are used to fund technical training programs.
144. Multiple Choice: The benefits principle says that:
Question The benefits principle says that:
Answer the amount of tax paid depends on the measure of value.
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