Question :
Multiple Choice – Section02: The Determinants of the Deadweight Loss
1.Supposeataxisimposedonbananas.Inwhichofthefollowingcaseswillthetaxcausetheequilibriumquantityofbananastoshrinkbythelargestamou : 1262565
Multiple Choice – Section02: The Determinants of the Deadweight Loss
1.Supposeataxisimposedonbananas.Inwhichofthefollowingcaseswillthetaxcausetheequilibriumquantityofbananastoshrinkbythelargestamount?
a.Theresponseofbuyerstoachangeinthepriceofbananasisstrong,andtheresponseofsellerstoachangeinthepriceofbananasisweak.
b.Theresponseofsellerstoachangeinthepriceofbananasisstrong,andtheresponseofbuyerstoachangeinthepriceofbananasisweak.
c.Theresponseofbuyersandsellerstoachangeinthepriceofbananasisstrong.
d.Theresponseofbuyersandsellerstoachangeinthepriceofbananasisweak.
2.Supposeataxisimposedonbaseballbats.Inwhichofthefollowingcaseswillthetaxcausetheequilibriumquantityofbaseballbatstoshrinkbythesmallestamount?
a.Theresponseofbuyerstoachangeinthepriceofbaseballbatsisstrong,andtheresponseofsellerstoachangeinthepriceofbaseballbatsisweak.
b.Theresponseofsellerstoachangeinthepriceofbaseballbatsisstrong,andtheresponseofbuyerstoachangeinthepriceofbaseballbatsisweak.
c.Theresponseofbuyersandsellerstoachangeinthepriceofbaseballbatsisstrong.
d.Theresponseofbuyersandsellerstoachangeinthepriceofbaseballbatsisweak.
3.Thepriceelasticitiesofsupplyanddemandaffect
a.boththesizeofthedeadweightlossfromataxandthetaxincidence.
b.thesizeofthedeadweightlossfromataxbutnotthetaxincidence.
c.thetaxincidencebutnotthesizeofthedeadweightlossfromatax.
d.neitherthesizeofthedeadweightlossfromataxnorthetaxincidence.
4.Thesizeofthedeadweightlossgeneratedfromataxisaffectedbythe
a.elasticitiesofbothsupplyanddemand.
b.elasticityofdemandonly.
c.elasticityofsupplyonly.
d.totalrevenuecollectedbythegovernment.
5.Thesizeofataxandthedeadweightlossthatresultsfromthetaxare
a.positivelyrelated.
b.negativelyrelated.
c.independentofeachother.
d.equaltoeachother.
6.Buyersofaproductwillbearthelargerpartofthetaxburden,andsellerswillbearasmallerpartofthetaxburden,whenthe
a.taxisplacedonthesellersoftheproduct.
b.taxisplacedonthebuyersoftheproduct.
c.supplyoftheproductismoreelasticthanthedemandfortheproduct.
d.demandfortheproductismoreelasticthanthesupplyoftheproduct.
7.Sellersofaproductwillbearthelargerpartofthetaxburden,andbuyerswillbearasmallerpartofthetaxburden,whenthe
a.taxisplacedonthesellersoftheproduct.
b.taxisplacedonthebuyersoftheproduct.
c.supplyoftheproductismoreelasticthanthedemandfortheproduct.
d.demandfortheproductismoreelasticthanthesupplyoftheproduct.
8.Whenataxisimposedonagoodforwhichthesupplyisrelativelyelasticandthedemandisrelativelyinelastic,
a.buyersofthegoodwillbearmostoftheburdenofthetax.
b.sellersofthegoodwillbearmostoftheburdenofthetax.
c.buyersandsellerswilleachbear50percentoftheburdenofthetax.
d.bothequilibriumpriceandquantitywillincrease.
9.Whenataxisimposedonagoodforwhichthedemandisrelativelyelasticandthesupplyisrelativelyinelastic,
a.buyersofthegoodwillbearmostoftheburdenofthetax.
b.sellersofthegoodwillbearmostoftheburdenofthetax.
c.buyersandsellerswilleachbear50percentoftheburdenofthetax.
d.theeffectivepricepaidbybuyerswilldecreaseasaresultofthetax.
10.Whenataxisimposedonagoodforwhichbothdemandandsupplyareveryelastic,
a.sellerseffectivelypaythemajorityofthetax.
b.buyerseffectivelypaythemajorityofthetax.
c.thetaxburdenisequallydividedbetweenbuyersandsellers.
d.Noneoftheaboveiscorrect;furtherinformationwouldberequiredtodeterminehowtheburdenofthetaxisdistributedbetweenbuyersandsellers.