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Indicate Whether The Sentence or Statement Is True or False

1. Statements 1, 2, 9, 11, and 15 are true. These statements correctly describe how taxes impact markets and cause deadweight loss by reducing quantity traded and eliminating potential gains from trade. 2. Statements 3, 4, 6, 8, 10, 12, 13, and 14 are false. They provide incorrect definitions or make inaccurate claims about how taxes impact markets, tax revenue, and deadweight loss. 3. Statements 5 and 7 could be true or false depending on the specific market conditions, so there is not enough information provided to definitively say.

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39 views1 page

Indicate Whether The Sentence or Statement Is True or False

1. Statements 1, 2, 9, 11, and 15 are true. These statements correctly describe how taxes impact markets and cause deadweight loss by reducing quantity traded and eliminating potential gains from trade. 2. Statements 3, 4, 6, 8, 10, 12, 13, and 14 are false. They provide incorrect definitions or make inaccurate claims about how taxes impact markets, tax revenue, and deadweight loss. 3. Statements 5 and 7 could be true or false depending on the specific market conditions, so there is not enough information provided to definitively say.

Uploaded by

mailk jklmn
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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True/False

Indicate whether the sentence or statement is true or false.

1. In general, a tax raises the price the buyers pay, lowers the price the sellers
receive, and reduces the quantity sold.

2. If a tax is placed on a good and it reduces the quantity sold, there must be a
deadweight loss from the tax.

3. Deadweight loss is the reduction in consumer surplus that results from a tax.

4. When a tax is placed on a good, the revenue the government collects is exactly
equal to the loss of consumer and producer surplus from the tax.

5. If John values having his hair cut at €20 and Mary's cost of providing the hair cut
is €10, any tax on hair cuts larger than €10 will eliminate the gains from trade and
cause a €20 loss of total surplus.

6. If a tax is placed on a good in a market where supply is perfectly inelastic, there is


no deadweight loss and the sellers bear the entire burden of the tax.

7. A tax on cigarettes would likely generate a larger deadweight loss than a tax on
luxury boats.

8. A tax will generate a greater deadweight loss if supply and demand are inelastic.

9. A tax causes a deadweight loss because it eliminates some of the potential gains
from trade.

10. A larger tax always generates more tax revenue.

11. A larger tax always generates a larger deadweight loss.

12. If an income tax rate is high enough, a reduction in the tax rate could increase tax
revenue.

13. A tax collected from buyers generates a smaller deadweight loss than a tax
collected from sellers.

14. If a tax is doubled, the deadweight loss from the tax more than doubles.

15. A deadweight loss results when a tax causes market participants to fail to produce
and consume units on which the benefits to the buyers exceeded the costs to the
sellers.

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