Answers to HW3 - Academic Csuohio

Name: ________________________ ID: A
____ 8. When a tax is imposed on tea and buyers of tea are required to send in the tax payments to the government,
a. buyers of tea and sellers of tea both are made worse off.
b. buyers of tea are made worse off and the well-being of sellers is unaffected.
c. buyers of tea are made worse off and sellers of tea are made better-off.
d. the well-being of both buyers of tea and sellers of tea is unaffected.
____ 9. If a tax is imposed on a market with inelastic demand and elastic supply,
a. buyers will bear most of the burden of the tax.
b. sellers will bear most of the burden of the tax.
c. the burden of the tax will be shared equally between buyers and sellers.
d. it is impossible to determine how the burden of the tax will be shared.
____ 10. Which of the following is the most correct statement about tax burdens?
a. A tax burden falls most heavily on the side of the market that is more elastic.
b. A tax burden falls most heavily on the side of the market that is less elastic.
c. A tax burden falls most heavily on the side of the market that is closer to unit elastic.
d. A tax burden is distributed independently of relative elasticities of supply and demand.
____ 11. In 1990, Congress passed a new luxury tax on items such as yachts, private airplanes, furs, jewelry, and
expensive cars. The goal of the tax was to
a. raise revenue from the wealthy.
b. prevent wealthy people from buying luxuries.
c. force producers of luxury goods to reduce employment.
d. limit exports of luxury goods to other countries.
____ 12. Which of the Ten Principles of Economics does welfare economics explain more fully?
a. The cost of something is what you give up to get it.
b. Markets are usually a good way to organize economic activity.
c. Trade can make everyone better off.
d. A country’s standard of living depends on its ability to produce goods and services.
____ 13. The area below a demand curve and above the price measures
a. producer surplus.
b. consumer surplus.
c. excess supply.
d. willingness to pay.
____ 14. What happens to consumer surplus if the price of a good increases?
a. It increases.
b. It decreases.
c. It is unchanged.
d. It may increase, decrease, or remain unchanged.
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