Taxes & Trade!

In the graph shown, S is the original supply curve and S1 is the supply curve including an excise tax. What is the area that represents the tax revenue to the government?

• P1, P3, V, T
• P2, P4, R, Z
• P2, P4, X, U
• P3, V, Q2, 0

Suppose that the demand for soft drinks is price elastic and the supply is price inelastic. If the government imposes a sales tax on soft drinks, which of the following will occur in the short run? 

• The tax burden will fall equally on producers & consumers
• The tax burden will fall more on producers
• The tax burden will fall more on consumers
• The government will collect $0 in tax revenue

The world price is Pw is equal to $100. When the economy moves from autarky to free trade, consumer surplus rises by area ___ and producer surplus falls by area ___.

• B+K+L;  B
• B+C+K+L;  B+C+K+L
• C+H+I;  B+C
• B+C+G+H+I+J+K+L;  B+C

The world price is Pw is equal to $100. The government imposes a tariff of $20/calculator. Compared to free trade, the tariff leads to a deadweight loss equal to area ___.

• K+L
• G+H+I+J
• G+J
• There is no deadweight loss created

In the accompanying graph, consumer surplus WITHOUT trade is equal to area ___.

• W+X+Y
• W
• Y
• W+X

In the accompanying graph, consumer surplus WITH trade is equal to area ___.

• W+X+Y
• W
• Y
• W+X

In the accompanying graph, producer surplus WITHOUT trade is equal to area ___.

• Y
• X+Y+Z
• W+X+Y
• X+Y

In the accompanying graph, producer surplus WITH trade is equal to area ___.

• Y
• X+Y+Z
• W+X+Y
• X+Y

In the accompanying graph, consumer surplus WITHOUT trade is equal to area ___.

• W+X+Y
• Z
• W+X+Z
• W

In the accompanying graph, consumer surplus WITH trade is equal to area ___.

• W+X+Y
• Z
• W+X+Z
• W