Draw a supply-and-demand diagram with a tax on the sale of a good. Show the deadweight loss. Show the tax revenue.

An increase in the supply of a good will decrease the total revenue producers receive if a. the demand curve is inelastic. b. the demand curve is elastic. c. the supply curve is inelastic. d. the supply curve is elastic.

An increase in the supply of a good will decrease the total revenue producers receive if a. the demand curve is inelastic. b. the demand curve is elastic. c. the supply curve is inelastic. d. the supply curve is elastic.

Why do experts disagree about whether labor taxes have small or large deadweight losses?

Suppose that the government imposes a tax on heating oil. a. Would the deadweight loss from this tax likely be greater in the first year after it is imposed or in the fifth year? Explain. b. Would the revenue collected from this tax likely be greater in the first year after it is imposed or in the fifth year? Explain.

When does a country become an exporter of a good? An importer?

The government places a tax on the purchase of socks. a. Illustrate the effect of this tax on equilibrium price and quantity in the socks market. Identify the following areas both before and after the imposition of the tax: total spending by consumers, total revenue for producers, and government tax revenue. b. Does the price received by producers rise or fall? Can you tell whether total receipts for producers rise or fall? Explain. c. Does the price paid by consumers rise or fall? Can you tell whether total spending by consumers rises or falls? Explain carefully. (Hint: Think about elasticity.) If total consumer spending falls, does consumer surplus rise? Explain.

Suppose that a market is described by the following supply and demand equations:

$$\begin{aligned} &Q^5=2 P \\ &Q^{\mathrm{D}}=300-P \end{aligned}$$

The government now levies a tax of $\$ 200$ per unit on this good. Is this a good policy? Why or why not? Can you propose a better policy?

If a nation that does not allow international trade in steel has a domestic price of steel lower than the world price, then a. the nation has a comparative advantage in producing steel and would become a steel exporter if it opened up trade. b. the nation has a comparative advantage in producing steel and would become a steel importer if it opened up trade. c. the nation does not have a comparative advantage in producing steel and would become a steel exporter if it opened up trade. d. the nation does not have a comparative advantage in producing steel and would become a steel importer if it opened up trade.

After economics class one day, your friend suggests that taxing food would be a good way to raise revenue because the demand for food is quite inelastic. In what sense is taxing food a “good” way to raise revenue? In what sense is it not a “good” way to raise revenue?

Hotel rooms in Smalltown go for $100, and 1,000 rooms are rented on a typical day. a. To raise revenue, the mayor decides to charge hotels a tax of$10 per rented room. After the tax is imposed, the going rate for hotel rooms rises to $108, and the number of rooms rented falls to 900. Calculate the amount of revenue this tax raises for Smalltown and the deadweight loss of the tax. b. The mayor now doubles the tax to$20. The price rises to $116, and the number of rooms rented falls to 800. Calculate tax revenue and deadweight loss with this larger tax. Are they double, more than double, or less than double? Explain.

Draw a supply-and-demand diagram with a tax on the sale of the good. Show the deadweight loss. Show the tax revenue.

When a nation opens itself to trade in a good and becomes an importer, a. producer surplus decreases, but consumer surplus and total surplus both increase. b. producer surplus decreases, consumer surplus increases, and so the impact on total surplus is ambiguous. c. producer surplus and total surplus increase, but consumer surplus decreases. d. producer surplus, consumer surplus, and total surplus all increase.

The government places a tax on the purchase of socks.

Does the price paid by consumers rise or fall? Can you tell whether total spending by consumers rises or falls? Explain carefully. (Hint: Think about elasticity.) If total consumer spending falls, does consumer surplus rise ? Explain.