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# If the government wishes to raise revenue by taxing cigarettes makes no difference

If the government wishes to raise revenue by taxing cigarettes, it:

A. makes no difference whether the consumer or the producer actually transfers the money to the government since the market effects are the same

B. is best to have the consumers pay the tax since they view cigarettes as necessities

C. is best to tax the producer since they will not cut production just because of the tax

D. is foolish since a sales tax increase leads to less tax revenue in an industry like tobacco

42.Let supply be given by P = 5Q and demand by P = 19 - 2Q. Suppose we now place a tax of 5 per unit of output on the seller.

(Appendix) The new supply curve is:

A. P = 5Q

B. P = 5 + 5Q

C. P = 5Q - 5

D. P = 5Qt5

43.Let supply be given by P = 5Q and demand by P = 19 - 2Q. Suppose we now place a tax of 5 per unit of output on the seller.

(Appendix) The new equilibrium quantity is:

A. 7

B. 2

C. 3

D. 5

44.Let supply be given by P = 5Q and demand by P = 19 - 2Q. Suppose we now place a tax of 5 per unit of output on the seller.

(Appendix) The new equilibrium price is:

A. 2

B. 7

C. 15

D. 10

45.(Appendix) As the supply curve becomes steeper, the proportion of a sales tax paid by the seller:

A. increases

B. decreases

C. stays the same

D. gets closer to zero

46.(Appendix) As the demand curve becomes steeper, the proportion of a sales tax paid by the seller:

A. increases

B. decreases

C. stays the same

D. gets closer to zero

47.(Appendix) Suppose that the supply curve for a good is vertical. In this case we would expect:

A. nothing to be sold so no tax is collected

B. a tax placed on the buyer to be borne entirely by the seller

C. a tax placed on the buyer to be borne entirely by the buyer

D. the tax to be shared equally by both buyer and seller

48.(Appendix) Which is true?

A. A per unit tax levied on the producer in an industry with a horizontal supply curve will be all paid by the producer

B. A per unit tax levied in an industry with a horizontal demand curve will be all paid by the producer

C. A producer never pays all of a per unit tax no matter what the market conditions

D. A seller never pays all of a per unit tax no matter what the market conditions

49.If the current price of pizzas is above the equilibrium price of pizzas then:

A. sellers of pizzas have an incentive to increase the price

B. sellers of pizzas have an incentive to decrease the price

50.If the price of roses increases:

A. the demand curve for carnations will shift to the right

B. the demand curve for carnations will shift to the left

C. the demand curve for roses will shift to the right

D. the demand curve for roses will shift to the left

Feb 11 2020 View more View Less