Sample Test

Sample Test - Midterm #2 Sample Questions Multiple Choice...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Midterm #2 Sample Questions Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. When the government places a tax on a product a. the cost of the tax to buyers and sellers will be less than the revenue raised from the tax by the government. b. the cost of the tax to buyers and sellers will equal the revenue raised from the tax by the government. c. the cost of the tax to buyers and sellers exceeds the revenue raised from the tax by the government. d. without additional information, such as the elasticity of demand for this product, it is impossible to compare tax cost with tax revenue. 2. Deadweight loss measures the a. loss in a market to buyers and sellers that is not offset by an increase in government revenue. b. loss in revenue to the government when buyers choose to buy less of the product. c. loss of consumer surplus in a market as a result of government intervention. d. lost revenue to businesses because of higher prices to consumers from the tax. 3. Assume that the demand for pretzels is relatively inelastic and that the demand for potato chips is relatively elastic. If the same percentage tax were placed on both goods, the tax on which product would create a larger deadweight loss? a. the tax on pretzels b. the tax on potato chips c. The taxes would create the same amount of deadweight loss. d. This question is impossible to answer without knowing the price of both pretzels and potato chips. 4. Total surplus with a tax is equal to a. consumer surplus and producer surplus. b. consumer surplus minus producer surplus. c. consumer surplus, producer surplus, and total surplus. d. consumer surplus, producer surplus, and tax revenue. Scenario 8-2 Sheila offers to do Stephanie's housework for $20 per week. Stephanie's opportunity cost of doing housework is $30 per week, and Sheila's opportunity cost of doing housework is $10 per week. 5. Refer to Scenario 8-2. The total gain in welfare due to the transaction described here is a. $10 per week. b. $20 per week. c. $30 per week. d. $40 per week. 6. One positive aspect of Henry George's land tax is that a. there is no deadweight loss. b. the tax would fall equally on buyers and sellers. c. it would improvethe quality of the land.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
d. only the rich would be paying taxes. 7. As the size of a tax increases the deadweight loss from the tax a. declines. b. remains constant. c. increases. d. No one knows how the deadweight loss changes because no tax has ever been reduced. 8. Ronald Reagan obviously believed that the labor supply curve was a. perfectly inelastic. b. perfectly elastic. c. relatively inelastic. d. relatively elastic. 9. When a country is on the downward-sloping side of the Laffer curves, cutting tax rates will a. lower tax revenues and increase deadweight loss. b.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This test prep was uploaded on 04/21/2008 for the course ECON EC101 taught by Professor Todd during the Spring '08 term at BU.

Page1 / 11

Sample Test - Midterm #2 Sample Questions Multiple Choice...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online