Answers to Exam 2 Fall 2000

True/False Questions

1.  F
2.  T
3.
  T
4.  T
5.
  F

Multiple Choice Questions

6.  C
7.  C
8.
  D
9.
  B
10.
  E
11.
  C
12.
  A
13.
  C
14.
  E
15.
  C
16.
  B
17.
  E

Problem

A.  Pe = $8, Qe = 4
B.  P with the tax = $9, Q with the tax = 3, Tax Revenue = $9
C.  Pe = $4, Qe = 8, P with the tax = $6, Q with the tax = 6, Tax Revenue = $18
D  In Part B, consumer tax incidence = $3 and producer tax incidence = $6 while in Part C, consumer tax incidence = $12 and producer tax incidence = $6.  The demand curve is intersected in the more elastic portion of the curve in Part B and in a relatively more inelastic portion in Part C.