Taxes and Subsidies

A tax imposed on the graph pictured will place a greater tax incidence on

• consumers

• producers

• neither

Suppose a $20 tax was imposed on the graph pictured.

The tax incidence for consumers would be

• 0

• 1/2

• 1

• Infinite

Suppose a $20 tax was imposed on the graph pictured.

The DWL generated would be

• 1200

• 900

• 300

• 0

The tax burden for a tax on this market will be

• greater for consumers

• greater for producers

• equal for producers and consumers

• not be placed on producers nor consumers

Suppose a subsidy of $10 is imposed on this market.

What price will buyers purchase orchids at?

• $20

• $25

• $30

• $35

• $40

Suppose a subsidy of $10 is imposed on this market.

What is the cost of the subsidy?

• $25,000

• $30,000

• $35,000

• $50,000

Suppose a subsidy of $10 is imposed on this market.

What is the total consumer surplus after the subsidy?

• $10,000

  ($10 * 2000 / 2)

• $22,500

  ($15 * 3000 / 2)

• $40,000

  ($20 * 4000 / 2)

• $62,500

  ($25 * 5000 / 2)

Suppose a subsidy of $10 is imposed on this market.

What is the DWL generated by the subsidy?

• 5,000

• 10,000

• 20,000

• 40,000