The Cost of Taxation

What effect do taxes have on economic welfare?

• Increase overall welfare

• Decrease overall welfare

• Do not affect welfare

• Increase tax revenues

What is deadweight loss?

• Loss of tax revenue

• Increase in production surplus

• Decrease in overall welfare due to tax

• Increase in consumer surplus

Which of the following factors affects the distribution of the tax burden?

• Total quantity of goods

• Tax size

• Elasticity of demand and supply

• Quality of goods

Which of the following effects is observed under taxation?

• Increase in sales volume

• Decrease in sales volume

• Increase in prices of goods

• Decrease in prices of goods

Which of the following factors determines the size of deadweight loss?

• Quality of goods

• Total quantity of goods

• Volume of tax revenues

• Elasticity of supply and demand

What happens to tax revenues when the tax rate increases?

• They always decrease

• They may initially increase and then decrease

• They remain unchanged

• They always increase

Which of the following taxes is the most important in the US economy?

• Value Added Tax

• Property Tax

• Labor Tax

• Income Tax

Which of the following factors can lead to an increase in deadweight loss?

• Decrease in prices of goods

• Decrease in taxes

• Increase in demand elasticity

• Increase in sales volume

What effect is observed when a tax is imposed on buyers?

• Increase in sales volume

• Decrease in the price paid by buyers

• Decrease in the price received by sellers

• Increase in overall welfare

Which of the following factors affects the elasticity of supply?

• Total quantity of goods

• Quality of goods

• Time required to change production

• Demand for the product