Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
20th Edition
ISBN: 9780078021756
Author: McConnell, Campbell R.; Brue, Stanley L.; Flynn Dr., Sean Masaki
Publisher: McGraw-Hill Education
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Question
Chapter 5, Problem 2RQ
To determine
The marginal benefit of the government program.
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QUESTION 16
16. Is the total expenditure of revenue on a government program (revenue collected by a tax) the full measure of the program's cost to society?
O a) Yes.
O b) No, because the benefit to society always exceeds the dollar cost of government programs.
O c) No, because this does not include the efficiency cost of collecting the tax revenue.
O d) No, because it does not include the cost of program administration and losses due to corruption.
Suppose that the demand and supply functions for a good are given as follows:
Demand: 0 = 600-5P
Supply: 0
Suppose now that government imposes $27 tax per unit of output on sellers. What is the burden on sellers?
=-300+4P
O 27
12
15
Which of the following statements is
correct? Choose an answer:
O 1. Regardless of which side of the market the tax is levied on, the more inelastic side of the market bears the
higher tax burden.
O 2. If the supply is more elastic than the demand, then the suppliers bear the greater tax burden
than the buyers.
3. The tax burden is incurred on the side of the market where the tax is levied.
O 4. The tax burden is always borne half by the supplier and half by the customer.
O 5. If the demand is more inelastic than the supply, then the providers bear the greater
tax burden than the buyers.
O00
Chapter 5 Solutions
Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
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