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Terms in this set (28)
producer and consumer surplus.
To analyze economic well-being in an economy it is necessary to use
both price and quantity of the good sold will change.
When a tax is levied on a good
raises the price buyers pay and lowers the price sellers receive
A tax on a good
both buyers and sellers are worse off
When a good is taxed
to be higher and the price the seller receives to be lower.
A tax placed on a product causes the price the buyer pays
consumer and producer surplus
Economic analysis uses which of the following to judge the effect of taxes on economic welfare?
supply curve upward (or to the left).
A tax levied on the supplier of a product shifts the
demand curve downward (or to the left).
A tax levied on the buyers of a product shifts the
sellers will bear most of the burden of the tax.
If a tax is imposed on a market with elastic demand and inelastic supply,
on both the buyers and the sellers.
Suppose a tax is imposed on the buyers of a product. The burden of the tax will fall
buyers to pay the majority of the tax.
A tax imposed on a market with an inelastic demand and an elastic supply will cause
size of the orange juice market is reduced
When a tax is placed on the buyers of orange juice, the
Buyers and sellers share the burden of the tax
What is true about the burden of a tax imposed on gasoline?
The benefit received by buyers in the market is measured by
Total tax revenue received by government can be expressed as
The benefit received by sellers in a market is measured by
benefit received by those people who gain from government's expenditure of the tax revenue.
The benefit from a tax is measured by the
loss in a market to buyers and sellers that is not offset by an increase in government revenue.
Deadweight loss measures the
The loss in total surplus resulting from a tax is called
reduction in total surplus that results from a tax
Deadweight loss is the
it induces buyers to consume less and sellers to produce less.
A tax has a deadweight loss because
consumer surplus, producer surplus, and tax revenue.
Total surplus with a tax is equal to
a decrease in the total economic welfare of society
Assume that a tax is levied on a good and that the government uses the revenue to clean up lethal toxic waste that would cause irreparable harm to a large number of people. In this case which of the following would NOT occur?
Assume that the supply of gasoline is relatively inelastic and the supply of wheat is relatively elastic. A tax levied on wheat will cause the loss of producer surplus to be
As the size of a tax increases the deadweight loss from the tax
increase, then decrease
If the size of a tax increases, tax revenue will
relates income tax rates to total income taxes collected.
The Laffer curve
As the tax rate rises, tax revenue rises for a while, but eventually begins to fall; deadweight loss continually rises.
Which of the following statements is true for most markets?
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