Tax incidence is most closely related to

price elasticity of supply and demand

A tax on the seller of a good will always

affect both the producer and seller

Which best describes the effect of a tax on the entire economy?

taxes are inefficient but equitable

Tax incidence analyzes

the distribution of the burden of the tax

The relationship between minimum wage and unemployment can be represented by

a price floor on a supply and demand diagram

A tax on sellers will have the greatest effect on consumers if

demand is very inelastic and supply is very elastic

An effective price floor

sets the market price above equilibrium

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AP Economics Chapter 6

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AP Economics Chapter 6: Supply, Demand, and Government Policies

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Questions 15

Answers

1
Tax incidence is most closely related to
income elasticity of supply and demand
equilibrium quantity
price elasticity of supply and demand
the size of the tax
2
A tax on the seller of a good will always
affect both the producer and seller
affect the sellers more than the consumers
affect only either the seller or the consumer
affect the consumers more than the sellers
3
A tax on diamond rings, which are a luxury good, would have a ____ effect on buyers
small
indeterminable
negligible
large
4
Which best describes the effect of a tax on the entire economy?
taxes are inequitable but efficient
taxes are neither equitable nor efficient policies
taxes are inefficient but equitable
taxes are inherently inequitable and inefficient
5
A tax on sellers is shown on a supply and demand diagram by
a shift in supply to the right
a shift in demand to the left
a downward shift in supply
a shift in supply to the left
6
In the supply and demand graph shown, the tax was applied to
the buyers
the suppliers
neither the buyers nor the suppliers
both the buyers and the suppliers
7
Tax incidence analyzes
the effect of the tax on total market efficiency
the loss in total revenue due to the tax
the change in price of a good before and after the tax
the distribution of the burden of the tax
8
The relationship between minimum wage and unemployment can be represented by
a price ceiling on a supply and demand diagram
a price floor on a supply and demand diagram
dead weight loss on a supply and demand diagram
a shift of the supply curve of employment to the right
9
Economics is your favorite class
False
True
10
In the supply and demand diagram below, which area represents the tax wedge?
C+D
B+D
B+E+C+D
B+E
11
If Good X and Good Y are substitutes, then a tax on Good X will
decrease the demand of Good Y
decrease the price of Good X
increase the demand of Good Y
Increase the quantity supplied of Good X
12
A tax on sellers will have the greatest effect on consumers if
demand is very elastic and supply is very inelastic
demand is very inelastic and supply is very elastic
both demand and supply are very elastic
both demand and supply are very inelastic
13
In the supply and demand graph shown, the price of the tax is represented by
AB
BC
ABC
AC
14
An effective price floor
sets the market price below equilibirum
increases the quantity sold of a good
lowers the price of a good
sets the market price above equilibrium
15
Which term refers to the revenue generated by a tax?
total cash flow
tax incidence
tax wedge
dead weight loss

AP Economics Chapter 6 Flashcards | StudBud