Question

The federal government doubles the excise tax from $0.18 to $0.36 per gallon of gasoline. Assuming the elasticity of demand for gasoline is -0.3, would tax revenue also double?

Yes

No

Question 27

Which of the following will not result in a rightward shift of the market supply curve for labor?

an increase in the working-age population

an increase in labor productivity

an increase in immigration

Question 28

Other things being equal, a   supply of workers tends to                    real wages.

smaller; not change

larger; increase

smaller; decrease

larger; decrease

Answer 1

First MCQ:

Answer is option: No

Only if the demand is perfectly inelastic , e=0, that the doubling of tax rate will double the tax revenue, bcoz quantity demanded will remain unchanged then .

Thus tax revenue will not double

Q27) option b)

If Labor supply increases, via rise in working age population, ( Labor force) or increase in immigration, that Labor supply curve shifts to right.

A & C will result in rightward shift of Labor supply curve

Now if Labor productivity rise, then output rise, supply curve of Labor remains unchanged

Q28) option d)

If workers supply rise, then wages fall ., With unchanged price level, real wages fall too.

If smaller supply, then real wages rise