Micro-Economics Ch 7 Questions

Micro-Economics Ch 7 Questions - Name: _ Date: _ 1. An...

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Page 1 Name: __________________________ Date: _____________ 1. An excise tax collected from the producers of a good: A) shifts the supply curve upward. B) creates a loss of revenue for the government. C) has a similar effect as a tax subsidy. D) shifts the supply curve downward. 2. Recently, the government considered adding an excise tax on CDs that can be used to record music and CD players that can record discs. If this tax was enacted, we would expect: A) that consumers would pay a higher price and producers would sell fewer of these CDs and CD players than before the tax. B) there to be no effect on consumption or the prices paid by consumers of these CDs and CD players. C) that consumers would pay a lower price and producers would receive a higher price for these CDs and CD players than before the tax. D) there to be an increase in economic activity due to the tax. 3. If an excise tax is imposed on automobiles and collected from consumers,: A) the demand curve will shift downward by the amount of the tax. B) the supply curve will shift upward by the amount of the tax. C) the equilibrium quantity supplied will increase relative to the pre-tax level. D) the equilibrium quantity demanded will increase relative to the pre-tax level. 4. The incidence of a tax: A) is a measure of the revenue the government receives from the tax. B) refers to who writes the check to the government. C) refers to who in reality pays the tax to the government. D) is a measure of the deadweight loss from the tax. 5. An excise tax creates inefficiency in that the number of transactions in a market is reduced. Because the tax discourages mutually beneficial transactions, there is ________ from a tax. A) quota rent B) deadweight loss C) excess burden D) both deadweight loss and excess burden 6. State governments place excise taxes on cigarettes because: A) they want to subsidize tobacco farming. B) they want to discourage cigarette smuggling. C) it is an easy way to raise tax revenue while discouraging smoking. D) they want to reduce deadweight loss.
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Page 2 7. As part of an anti-obesity program, the government places an excise tax on high-fat foods. We would expect consumers to pay almost all of this tax if demand is: A) inelastic and supply is inelastic. B) inelastic and supply is elastic.
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This note was uploaded on 12/02/2011 for the course ECONOMICS 202 taught by Professor Black during the Fall '08 term at Boise State.

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Micro-Economics Ch 7 Questions - Name: _ Date: _ 1. An...

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