Question51. When a tax is placed on the buyers of lemonade,

51. When a tax is placed on the buyers of lemonade,

a.	the sellers bear the entire burden of the tax.
b.	the buyers bear the entire burden of the tax.
c.	the burden of the tax will be always be equally divided between the buyers and the sellers.
d.	the burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.

52. If a tax is levied on the buyers of sugar, then

a.	buyers will bear the entire burden of the tax.
b.	sellers will bear the entire burden of the tax.
c.	buyers and sellers will share the burden of the tax.
d.	the government will bear the entire burden of the tax.

53. If the government passes a law requiring buyers of motorcycles to send $500 to the government for every motorcycle they buy, then

a.	the demand curve for motorcycles shifts downward by $500.
b.	buyers of motorcycles pay $500 more per motorcycle than they were paying before the tax.
c.	sellers of motorcycles are unaffected by the tax.
d.	All of the above are correct.

54. Suppose buyers of liquor are required to send $1.00 to the government for every bottle of liquor they buy. Further, suppose this tax causes the effective price received by sellers of liquor to fall by $0.80 per bottle. Which of the following statements is correct?

a.	This tax causes the demand curve for liquor to shift downward by $1.00 at each quantity of liquor.
b.	The price paid by buyers is $0.20 per bottle more than it was before the tax.
c.	Eighty percent of the burden of the tax falls on sellers.
d.	All of the above are correct.

55. Suppose buyers of liquor are required to send $1.00 to the government for every bottle of liquor they buy. Further, suppose this tax causes the effective price received by sellers of liquor to fall by $0.60 per bottle. Which of the following statements is correct?

a.	This tax causes the supply curve for liquor to shift upward by $1.00 at each quantity of liquor.
b.	The price paid by buyers is $0.40 per bottle more than it was before the tax.
c.	Sixty percent of the burden of the tax falls on buyers.
d.	All of the above are correct.

56. Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then

a.	the demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20.
b.	the demand curve will shift upward by $20, and the price paid by buyers will decrease by $20.
c.	the supply curve will shift downward by $20, and the effective price received by sellers will increase by less than $20.
d.	the supply curve will shift downward by $20, and the effective price received by sellers will increase by $20.

57. Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then

a.	the demand curve will shift upward by $20, and the effective price received by sellers will increase by $20.
b.	the demand curve will shift upward by $20, and the effective price received by sellers will increase by less than $20.
c.	the supply curve will shift downward by $20, and the price paid by buyers will decrease by $20.
d.	the supply curve will shift downward by $20, and the price paid by buyers will decrease by less than $20.

58. When a tax is levied on buyers of tea,

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.

59. Which of the following statements is correct concerning the burden of a tax imposed on candles?

a.	Buyers bear the entire burden of the tax.
b.	Sellers bear the entire burden of the tax.
c.	Buyers and sellers share the burden of the tax.
d.	We have to know whether it is the buyers or the sellers that are required to pay the tax to the government in order to make this determination.

60. Which of the following is not correct?

a.	Taxes levied on sellers and taxes levied on buyers are not equivalent.
b.	A tax places a wedge between the price that buyers pay and the price that sellers receive.
c.	The wedge between the buyers’ price and the sellers’ price is the same, regardless of whether the tax is levied on buyers or sellers.
d.	In the new after-tax equilibrium, buyers and sellers share the burden of the tax.

61. If the government removes a tax on sellers of a good and imposes the same tax on buyers of the good, then the price paid by buyers will

a.	increase and the price received by sellers will increase.
b.	increase and the price received by sellers will not change.
c.	not change and the price received by sellers will increase.
d.	not change and the price received by sellers will not change.

62. If the government removes a tax on buyers of a good and imposes the same tax on sellers of the good, then the price paid by buyers will

a.	not change and the price received by sellers will not change.
b.	not change and the price received by sellers will decrease.
c.	decrease and the price received by sellers will not change.
d.	decrease and the price received by sellers will decrease.

63. In the final analysis, tax incidence

a.	depends on the legislated burden.
b.	is entirely random.
c.	depends on the forces of supply and demand.
d.	falls entirely on buyers or entirely on sellers.

64. If the government removes a tax on a good, then the quantity of the good sold will

a.	increase.
b.	decrease.
c.	not change.
d.	All of the above are possible.

65. If the government removes a tax on a good, then the price paid by buyers will

a.	increase and the price received by sellers will increase.
b.	increase and the price received by sellers will decrease.
c.	decrease and the price received by sellers will increase.
d.	decrease and the price received by sellers will decrease.

66. Which of the following causes a shortage of a good?

a.	a binding price floor
b.	a binding price ceiling
c.	a tax on the good
d.	More than one of the above is correct.

67. Which of the following causes a surplus of a good?

a.	a binding price floor
b.	a binding price ceiling
c.	a tax on the good
d.	More than one of the above is correct.

68. Which of the following causes the price paid by buyers to be different than the price received by sellers?

a.	a binding price floor
b.	a binding price ceiling
c.	a tax on the good
d.	More than one of the above is correct.

69. The price paid by buyers in a market will increase if the government

a.	increases a binding price floor in that market.
b.	increases a binding price ceiling in that market.
c.	decreases a tax on the good sold in that market.
d.	More than one of the above is correct.

floors

70. The price paid by buyers in a market will increase if the government

a.	decreases a binding price floor in that market.
b.	increases a binding price ceiling in that market.
c.	decreases a tax on the good sold in that market.
d.	imposes a binding price ceiling in that market.

71. The price paid by buyers in a market will decrease if the government

a.	increases a binding price floor in that market.
b.	increases a binding price ceiling in that market.
c.	decreases a tax on the good sold in that market.
d.	More than one of the above is correct.

72. The price paid by buyers in a market will decrease if the government

a.	imposes a binding price floor in that market.
b.	increases a binding price ceiling in that market.
c.	increases a tax on the good sold in that market.
d.	decreases a binding price floor in that market.

73. The price received by sellers in a market will increase if the government

a.	decreases a binding price floor in that market.
b.	decreases a binding price ceiling in that market.
c.	decreases a tax on the good sold in that market.
d.	None of the above is correct.

74. The price received by sellers in a market will increase if the government

a.	decreases a binding price floor in that market.
b.	increases a binding price ceiling in that market.
c.	increases a tax on the good sold in that market.
d.	imposes a binding price ceiling in that market.

75. The price received by sellers in a market will decrease if the government

a.	increases a binding price floor in that market.
b.	increases a binding price ceiling in that market.
c.	decreases a tax on the good sold in that market.
d.	None of the above is correct.

76. The price received by sellers in a market will decrease if the government

a.	imposes a binding price floor in that market.
b.	decreases a binding price ceiling in that market.
c.	decreases a tax on the good sold in that market.
d.	increases a binding price floor in that market.

77. The quantity sold in a market will increase if the government

a.	decreases a binding price floor in that market.
b.	decreases a binding price ceiling in that market.
c.	increases a tax on the good sold in that market.
d.	More than one of the above is correct.

78. The quantity sold in a market will increase if the government

a.	decreases a binding price floor in that market.
b.	increases a binding price ceiling in that market.
c.	decreases a tax on the good sold in that market.
d.	More than one of the above is correct.

79. The quantity sold in a market will decrease if the government

a.	decreases a binding price floor in that market.
b.	decreases a binding price ceiling in that market.
c.	decreases a tax on the good sold in that market.
d.	More than one of the above is correct.

80. The quantity sold in a market will decrease if the government

a.	decreases a binding price floor in that market.
b.	increases a binding price ceiling in that market.
c.	increases a tax on the good sold in that market.
d.	More than one of the above is correct.

Figure 6-9

81. Refer to Figure 6-9. The equilibrium price in the market before the tax is imposed is

a.	$1.
b.	$2.
c.	$5.
d.	$6.

82. Refer to Figure 6-9. As the figure is drawn, who sends the tax payment to the government?

a.	the buyers
b.	the sellers
c.	A portion of the tax payment is sent by the buyers and the remaining portion is sent by the sellers.
d.	The question of who sends the tax payment cannot be determined from the figure.

83. Refer to Figure 6-9. The price that buyers pay after the tax is imposed is

a.	$5.
b.	$6.
c.	$7.
d.	$8.

84. Refer to Figure 6-9. The effective price that sellers receive after the tax is imposed is

a.	$5.
b.	$6.
c.	$7.
d.	$8.

85. Refer to Figure 6-9. The amount of the tax per unit is

a.	$1.
b.	$1.50.
c.	$2.
d.	$3.

86. Refer to Figure 6-9. The burden of the tax on buyers is

a.	$1 per unit.
b.	$1.50 per unit.
c.	$2 per unit.
d.	$3 per unit.

87. Refer to Figure 6-9. The burden of the tax on sellers is

a.	$1 per unit.
b.	$1.50 per unit.
c.	$2 per unit.
d.	$3 per unit.

88. Refer to Figure 6-9. Suppose the same supply and demand curves apply and a tax of the same amount per unit as shown here is imposed. Now, however, the sellers of the good, rather than the buyers, are required to pay the tax to the government. Now, relative to the case depicted in the figure,

a.	the burden on buyers will be larger and the burden on sellers will be smaller.
b.	the burden on buyers will be smaller and the burden on sellers will be larger.
c.	the burden on buyers will be the same and the burden on sellers will be the same.
d.	The relative burdens in the two cases cannot be determined without further information.

89. Refer to Figure 6-9. How much tax revenue does this tax generate for the government?

a.	$150
b.	$180
c.	$250
d.	$300

Figure 6-10

90. Refer to Figure 6-10. The price paid by buyers after the tax is imposed is

a.

$8.

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