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C3answers - Practice Questions for Experiment 3 True-False...

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Unformatted text preview: Practice Questions for Experiment 3 True-False Questions: 1. The real effects ofs per-unit sales tax are no different whether the tax is collected from seilers or from buyers. {True} V‘AeWWMmmSMfl came, 3'- fiWWAJ-WMW EWWWfiflf 2. If the per-unit sales tax on a gear] is increased, the revenue from that tax necessarin increases. {False} 3. The less to buyers and sellers from a tax is always greater than the revenue raised by the tax {False} 45’me smwmm 4. If the supply curve cf a good is perfectly ineieetic. a tax on eeilere ef'thet gccd dues net increase the competitive equiiihriurn price of the good. {True} Multiple Choice Questions: 5. In Brass Monkey, Montana, there is a oornpefitiue market for used ' snowmobiles. In this market. there are 4D demanders willing to pay up to 54%, 5t} demanders willing to payr up to $35fl, and #D demanders willing to pay up to 953%. There are 5D suppliers who are willing to sell their snowmobiles at any price of $2M} or higher but will not sell for less than that amount. There are 5|] suppliers who are willing to sell their snowmobiles at any price above $35 but will not sell for less than that amount. Each demander oan bu}r at most one unit. and eaoh seller can supplyr at most one unit. In the absence ofa sales tax, what would be the competitiVe equilibrium prioe P and quantity Q? {a} la} P=$35|L Q=5D lb] P=$3?5. Et=4ii lo} P=$30fl. Q=1DD id] P2532”). E1275 supp/7r W afar frézwixm E. A $1 Di} sales tax that is paid by suppiiere will cause the price that demandere par“:I for snowmobiiea in Eraea Monkey to be {it} {a} $111.10 higher than the equilibrium price without taxes. {h} $15 higher than the equilibrium price without taxes. [a] $T’5 lower than the equilibrium price without taxes. {ti} the same as the equilibrium price wifliout taxes- 3'. How much excess burden is caused by the $1111] tax on sales of used snowmobiles in Brass Monkey? [in] [a] $3,009 {'3} $11 [1:] $9,591] [11} $1,131.10 @350 FEROOJX {it}: {35750 W%@,WWAW¢ @r 350 a fiifipmfigm) x5?) we 391,550 B. The supply curve of gold is given by the function p=19+q, where p Is the price of an ounce of gold and g is ounces of gold. The demand curve for gold is given by the function p=399n3q- Suppose the government were to levy.l a sales tax of $19 per ounce on the sale of gold. The taxwouid he collected from sellers of gold. How would this tax effect the price of gold paid by buyers in a competitive equilibrium? lo} [a] The price would decline by $2.59 per ounce. {b} The price would rise by $5.99 per ounce. [c] The price would rise by 5?.59 per ounce. {d} The price would rise by $19.99 per ounce. 6W6“ fix: (pf-E; r-‘L Eiaflfifi— heat} =3??? 66).: L79. 5 9. There are 1D,Dlll}families, each with one school age child- Six thousand of these families would be willing to pay as much as $1fl.flfll] per year to have their child educated in a private school rather than a free public school. The remaining four thousand efthose families would be willing to pay as much as $63M fora private school education for their child. There are lit] entrepreneurs willing to open a private school. Each school would enroll 1W students. Fifty ofthoae entrepreneurs are willing to operate a private school is they receive at least $4,!llll} per year in tuition for each child the!“' educate. The remaining fill of those entrepreneurs are willing to operate a school is they raceive tuition of $3.09!? per year for each child them:r educate. What Is the competitive equilihrium tuition P and private school enrollment El? {c} a. P=$4.0Dtl and Q=4,lifill b. F=$fi.l.illtl and Q=E.Dllfl c. P=$E.lifl£l and Ci=ti,flDD d. F=$1fl.flfll.l and Q=5.lllili 1U. Suppose that the market for private schools is described as in question 9 above. If the state government were to pay each family a subsidy of $3.ililtl per child educated in private school, what would be the equilibrium tuition P and private school enrcilment Ct? [c] a. P=$3.DDIJ and Q=5,IJDD b. F=$E,WD and Ill-15.0% c. P=$e.ccn and o=a,ccu d. P=$1U.UDD and Q=B,EIDD ,6? Jaime}, W49. WWW 44* MW '11. If the market for private schools were as described in question 9 above. how would a $3.{iflfl subsidy for children in private school affect the profits of families and private school entreprenuers? [a] a. Profits of families would increase by $12 million. and profits of private school entrepreneurs would increase by $3 million. b. Profits of families would increase lav $3 million. and profits of private school entrepreneurs would increase by $5 million. c. Profits offamilies would increase by $12 million. and profits of private school entrepreneurs would increase by $15 million. d. Profits of families would not change. and profits of private school entrepreneurs would increase by $5 million. 505mm: “"35“"!‘3f 'WWW =(fgmosfiaoojiifnfiq): diam Wire M WW "7."... a We? WWW :- C3,:5DDH‘t.MJC5;mo): deem Way W mm = £3 (95%) mm! ngmm s (emossm)(é;m)==¢wm W‘gm mm. :- (Ema ”‘6sz (:anan __: 0 W43 {flow Malacca = (fiwoosjmjtfimjséafia Wag/smear (sea-5624a. :- {gwegmjfiswfl Jifi’h 12. if the market for private schools were as described in question 9 above and the state were to provide a $3,Ul}il subsidy for children In private schools. how would the total profits from the suhsidglr for families and private school entrepreneurs compare with the cost of the subsidy to the state government? id] a. The cost of the subsidy would be $5 million less than the increase in the total profits of families and ens-epreneurs- b. The cost of the subsidy would be $5 million more than the increase in the total profits of families and entrepreneurs. c. The cost of the subsidy would equal the total profits of families and entrapreneurs. d. The cost of the subsidy would he 54 miliion more than the increase In the total profits of families and entrepreneurs. ...
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