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Microeconomics by David Colander 11 Edition-Test Bank

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  • ISBN-10 ‏ : ‎ 1260507149
  • ISBN-13 ‏ : ‎ 978-1260507140

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SKU:tb1002385

Microeconomics by David Colander 11 Edition-Test Bank

Microeconomics, 11e (Colander)
Chapter 7 Taxation and Government Intervention

1) When the market is in equilibrium, total surplus is maximized.

2) The total cost of taxation to consumers and producers generally exceeds the amount of tax revenue collected by government.

3) An excise tax on alcohol causes the supply of alcohol to decrease and the price of alcohol to decrease.

4) If a tax is legally required to be paid by sellers, sellers typically bear the full burden of the tax.

5) If the demand for Insulin is highly inelastic, the burden of a tax on Insulin will be borne almost entirely by sellers.

6) If the government’s goal is to alter people’s behavior through taxation, taxing goods with relatively elastic demand and supply would be most effective.

7) A price ceiling is, in essence, an implicit tax on producers and an implicit subsidy to consumers.

8) Unlike excise taxes, price ceilings create no deadweight loss.

9) Price ceilings create shortages, but taxes do not.

10) The military draft can be seen as an implicit tax on potential recruits and a subsidy to those who demand defense services.

11) The more inelastic the demand for agricultural output, the stronger the incentive for farmers to engage in rent-seeking activities.

12) If the minimum that the Smith family would be willing to sell their house for is $185,000, but they in fact sell it for $210,000, they will receive:
A) producer surplus in the amount of $210,000.
B) producer surplus in the amount of $25,000.
C) consumer surplus in the amount of $210,000.
D) consumer surplus in the amount of $25,000.

13) The distance between the demand curve and the price the consumer has to pay for a product (given quantity demanded) is referred to as:
A) market surplus.
B) market shortage.
C) consumer surplus.
D) producer surplus.

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