Suppose that a 25 tax is placed on cigarettes under

73. Suppose that a $.25 tax is placed on cigarettes. Under what circumstances will cigarette
producers pay the full amount of the tax?
A. If supply is perfectly elastic
B. If demand is perfectly inelastic
C. If supply is perfectly inelastic
D. The consumer and the seller always share the burden of the tax
AACSB: Analytic
Bloom's: Application
Learning Objective: 17-4
Level: Moderate
Topic: Tax incidence and efficiency loss
74. The economic tax incidence is shifted forward to the consumer to a larger extent the:
AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 17-4
Level: Difficult
Topic: Tax incidence and efficiency loss
17-26

Chapter 17 - Public Choice Theory and the Economics of Taxation
75. If the demand curve for a good slopes downward, and the supply curve of the good slopes
upward, the imposition of a tax which increases the costs of production:
AACSB: Analytic
Bloom's: Application
Learning Objective: 17-4
Level: Easy
Topic: Tax incidence and efficiency loss
76. The supply of meat is more elastic in the long run than in the short run. Ceteris paribus , as
time goes by, a tax on cattle will be increasingly passed on to the:
AACSB: Analytic
Bloom's: Application
Learning Objective: 17-4
Level: Moderate
Topic: Tax incidence and efficiency loss
77. In 1981, Congress considered increasing the Federal tax on gasoline by $.10 per gallon.
Oil industry analysts predicted that nearly all of the tax could be "passed on" to the consumer,
at least in the short run. Which of the following statements is consistent with the analysts'
view? In the short run the gasoline:
A. Demand curve is perfectly elastic
B. Supply curve is perfectly inelastic
C. Demand curve is relatively more elastic than the supply curve
D. Demand curve is relatively more inelastic than the supply curve
AACSB: Analytic
Bloom's: Application
Learning Objective: 17-4
Level: Moderate
Topic: Tax incidence and efficiency loss
17-27

Chapter 17 - Public Choice Theory and the Economics of Taxation