Adris

Congress and the president decide that the United States should reduce air pollution by reducing its use of gasoline. They impose a $0.50 tax on each gallon sold. Pick the correct statement from below: a. the govt. should tax the producers of gasoline bacause it will be a great burden for the consumers to pay the tax. b. the govt. should tax the consumers because it will force the consumers to do car pooling. c. it doesnt matter whether the producers or the consumers are taxed because both parties have to share the burden equally. d. the tax on gasoline will affect both the consumers and the producers. D 7. In 6 above, if the demand for gasoline is highly inelastic than the supply, then a. a tax on gasoline will create excess gasoline in the market. b. the burden of tax will fall heavily on the producers. c. the burden of tax will fall heavily on the consumers. C d. a tax on gasoline will create shortage of gasoline in the market. 8. In 6 above, if the demand for gasoline and the supply of gasoline are equally elastic, then, a tax of $0.50 on gasoline a. reduces the quantity sold, buyers pay $0.25 more, and the sellers receive $0.25 less than the original price. b. burden of tax is shared equally by the buyers and the sellers. c. the difference between the price buyers pay and the price sellers receive is $0.50. d. all are true. D Multiple-choice questions: Chapter 7 1. Willingness to pay a. is the minimum valuation of each buyer of a good. b. is the price that each buyer can afford given his current income. c. is the maximum valuation of each buyer of a good. d. must be greater than the price of a good. 2. Willingness to sell a. is the maximum valuation of each seller of a good. b. is the sellers of cost production of a good. c. is the price that each seller can charge to make a profit. d. must be less than the price of a good. C B 3. A marginal buyer is the one a. who, if the price is increased a little is the first to go out of the market. b. who, if the price...