Question :
Figure 4-10
11) Refer to Figure 4-10. Suppose the market initially : 1388188
Figure 4-10
11) Refer to Figure 4-10. Suppose the market is initially in equilibrium at price P1 and now the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax? For demand curve D1
A) the producer bears a smaller share of the tax burden if the supply curve is S2.
B) the producer bears a smaller share of the tax burden if the supply curve is S1.
C) the producer’s share of the tax burden is the same whether the supply curve is S1 or S2.
D) the producer bears the entire burden of the tax if the supply curve is S2 and the consumer bears the entire burden of the tax if the supply curve is S1.
Figure 4-11
12) Refer to Figure 4-11. Suppose the market is initially in equilibrium at price P1 and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax?
A) The consumer will bear a greater share of the tax burden if the demand curve is D1.
B) The consumer’s share of the tax burden is the same whether the demand curve is D1 or D2.
C) The consumer will bear a greater share of the tax burden if the demand curve is D2.
D) The consumer will bear the entire burden of the tax if the demand curve is D1 and the producer will bear the entire burden of the tax if the demand curve is D2.
13) Suppose an excise tax of $0.75 is imposed on every pack of cigarettes sold and sellers are responsible for paying this tax. How would the imposition of the tax be illustrated in a graph?
A) The supply curve for cigarettes would shift to the left by $0.75.
B) The supply curve for cigarettes would shift to the left by less than $0.75.
C) The supply curve for cigarettes would shift to the left by more than $0.75.
D) The supply curve for cigarettes would shift to the right by $0.75.
14) In Singapore the government places a $5,000 tax on the buyers of new automobiles. After the purchase of a new car, a buyer must pay the government $5,000. How would the imposition of the tax on buyers be illustrated in a graph?
A) The tax will shift the demand curve to the right by $5,000.
B) The tax will shift the demand curve to the left by $5,000.
C) The tax will shift both the demand and supply curve to the right by $5,000.
D) The tax will shift the supply curve to the left by $5,000.
15) A tax is imposed on employers and workers that are used to fund Social Security and Medicare. This tax is sometimes referred to as
A) the Income Security Tax.
B) the federal income tax.
C) the ACIF.
D) the payroll tax.
16) FICA is a payroll tax imposed on employers and workers that is used to fund Social Security and Medicare. Which of the following statements regarding the tax is true?
A) Employers are required to pay a greater share of the tax than workers but most economists believe the burden of the tax is shared equally.
B) Congress wanted the burden of the tax to be greater for employers than for workers.
C) Most economists believe the burden of the tax falls almost entirely on workers.
D) Most economists believe the burden of the tax falls mostly on employers.
17) “Taxes are what we pay for a civilized society.” This statement was made by
A) Adam Smith.
B) Oliver Wendell Holmes.
C) Herbert Hoover.
D) Franklin Roosevelt.
18) Economists have shown that the burden of a tax is
A) greater on the buyer when the tax is collected from the buyer.
B) greater on the seller when the tax is collected from the seller.
C) greater on the buyer when the tax is collected from the seller and greater on the seller when the tax is collected from the buyer.
D) the same whether the tax is collected from the buyer or the seller.
19) An efficient tax is
A) a tax that imposes an equal tax burden on buyers and sellers.
B) a tax that raises a maximum amount of revenue.
C) a tax that imposes a small excess burden relative to the tax revenue that it raises.
D) a tax that is used to fund research and development of new technology.
20) The division of the burden of a tax between buyers and sellers in a market is called tax incidence.
