**Question 7:**To reduce the budget deficit, the government creates new unit taxes that generate $3 billion in revenue. How will this affect total surplus (i.e., consumer surplus + producer surplus)?a. Total surplus will be unaffectedb. Total surplus will fall by less than $3 billionc. Total surplus will fall by $3 billiond. Total surplus will fall by more than $3 billion---*Explanation:* This question assesses the impact of taxation on economic surplus. In economics, total surplus is the sum of consumer surplus and producer surplus. Introducing a new tax typically decreases total surplus due to market inefficiencies and deadweight loss, which occurs when the cost to producers and consumers from the tax exceeds the revenue generated. This question explores various potential effects on total surplus, highlighting the concept that taxes can result in efficiency losses greater than the tax revenue itself.

Answered: #7. To reduce the budget deficit, the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question: 2The government is interested in imposing a tax to generate revenue X. It is considering whether they should tax the consumer’s income or impose a tax on a commodity y. What should the government do if they do NOT care about consumer welfare? Use three graphs to illustrate your answer and explain those graphs in your answer.
8....
In the diagram, consumer surpluses before and after the tax are ______ and ______, respectively. A + B; B A + B + C; A D + E + F; B B + C; A + B
Question 25 The burden of a tax on a good is said to fall completely on the producers if the: a. wages received by workers who produce the good increase by the amount of the tax. b. price paid by consumers for the good increases by the amount of the tax. c. price paid by consumers does not change. d. price paid by consumers for the good declines by the amount of the tax.
Explain whether the state of Tennessee had a surplus in fiscal year 2019. A The state did not have a surplus in fiscal year 2019 because the total revenues were equal to the total expenditures. B The state had a surplus in fiscal year 2019 because total revenues were about $7.676 billion more than total expenditures. C The state did not have a surplus in fiscal year 2019 because total expenditures were about $7.676 billion more than total revenues. D The state had a surplus in fiscal year 2019 because total revenues were about $53.441 billion
Question 23 Why might a tax be inefficient? a It distorts behavior, causing the marginal costs to be higher than the marginal benefits b The average cost of the tax is too high. c The tax is politically infeasible. d The tax does not collect enough revenue.
In a market without taxes, consumer surplus is $100, and producer surplus is $200. After the government enacts a tax, consumer surplus is $70, producer surplus is $150, and tax revenue is $20. What is the deadweight loss of the government intervention? Group of answer choices E. $80 A. $20 C. $50 D. $60 B. $3
4. The St Lawrence County legislature needs some cash and has imposed a $3.00 tax on all Hostess Twinkies sold in the county. Because we eat a collective total of 10,000 Twinkies a month here, they expect to raise $30,000 a month in tax revenues. Are they likely to raise this amount? Explain why or why not, using the concepts of supply and demand and taxation, What general economic effect will they get by imposing this tax?
9. When a sales tax is imposed on sellers, we can imagine a hypothetical supply curve shifted to the left such that the vertical distance between the original supply curve and the new (supply + tax) curve equals the sales tax divided by the price elasticity of demand. sales tax multiplied by the price elasticity of demand. sales tax multiplied by the price elasticity of supply. amount of the sales tax.
The vertical distance between points A and B represents a tax in the market. Refer to Figure The amount of tax revenue received by the government is a. $2.50. b. $5. c. $4. d. $9. The vertical distance between points A and B represents a tax in the market. PRICE 210 11 9 8 5 B 3 2 1 Supply Demand H 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 QUANTITY

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