ch 8 MicroEcon

24 cards·by amcloopy

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To analyze economic wellbeing in an economy it is necessary to use demand and supply.

false

When a tax is levied on a good only the quantity of the good sold will change.

false, price and quantity change

A tax on a good raises the price buyers pay and lowers the price sellers receive.

true

When a good is taxed both buyers and sellers are worse off.

true

A tax placed on a product causes the price the buyer pays and the price the seller receives to be higher.

false, price the buyer pays to increase, price sellers receive to decrease

Economic analysis uses consumer and producer surplus to judge the effect of taxes on economic welfare.

true

A tax levied on the supplier of a product shifts the supply curve upward (or to the left).

true

A tax levied on the buyers of a product shifts the supply curve upward (or to the left).

false, to the right

If a tax is imposed on a market with elastic demand and inelastic supply, buyers will bear most of the burden of the tax.

false, sellers

Suppose a tax is imposed on the buyers of a product. The burden of the tax will fall entirely on the buyers.

false, mostly on the buyers

A tax imposed on a market with an inelastic demand and an elastic supply will cause sellers to pay the majority of the tax.

false, buyers

When a tax is placed on the buyers of orange juice, the size of the orange juice market is reduced.

true

A tax imposed on gasoline, will have buyers and sellers sharing the burden of the tax.

true

The benefit received by buyers in the market is measured by the demand curve.

false

The benefit received by the government from a tax is measured by deadweight loss.

false, the fall in total surplus that results from a market distortion

Total tax revenue received by government can be expressed as T/Q.

false, TxQ

The benefit received by sellers in a market is measured by the supply curve.

false, producer surplus

The benefit from a tax is measured by the benefit received by those people who gain from government’s expenditure of the tax revenue.

true

Deadweight loss measures the loss in a market to buyers and sellers that is not offset by an increase in government revenue.

true

The loss in total surplus resulting from a tax is called a deficit.

false, deadweight loss

Deadweight loss is the reduction in total surplus that results from a tax.

true

A tax has a deadweight loss because it induces the government to spend more.

false, it induces buyers to consume less and sellers to produce less.

Total surplus with a tax is equal to consumer surplus and producer surplus.

false, less than

Government uses the revenue to clean up lethal toxic waste that would cause irreparable harm, decrease in total economic welfare

false, increase in total economic welfare