Unformatted text preview: This graph illustrates the market for groceries with and without a per unit tax: w
0 5 6 10 Qumm'ty ’ \
17. On this graph the incidence of the tax on groceries ED”:- *~~---"’""
A. falls solely on the supplier. to _.x;,:_, ;_. \ ,_ E
B. falls primarily on the supplier, but the consumer bears some of the tax. a ' \C <3, :: ©is evenly Split between the supplier and the consumer. .
D. falls primarily on the consumer, although the supplier bears some of the tax.
E. depends on whether or not there is an extemality in this market. l8. The deadweight loss of this tax is ’2 \ C;
A . relatively large because it is a tax on a necessity. '
relatively small because it is a tax on a necessity.
$67 zero because the tax money is used to beneﬁt citizens of the state.
We distance between the two supply curves:
Welatively large because it represents a large fraction of the price of groceries. 19. A bill is before your state legislature to increase the sales tax on beer. The legislator with whom you intern
has argued that this tax will increase state revenues signiﬁcantly, and has asked you to provide economic
‘ analysis to back him up. You will be able to support this tax as a way to increase revenue
. _ A. unconditionally, because any new tax will increase revenues signiﬁcantly.
B. only if you ﬁnd that demand for beer is price elastic. -
nly if you ﬁnd that demand for beer is price inelastic.
. only if you ﬁnd that demand for beer is income elastic.
B. only if you ﬁnd that beer is an inferior good. 20. The proﬁt maximizing rule l\/[R=MC applies to
B. monopolists only.
' C. perfect competitors only.
D. all ﬁrm types except perfect competitors.
E. both pure monopolists and perfect competitors. ...
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- Spring '07