Question

S + tax on seller Price (dollars per unit) 0 1 2 3 4 5 Quantity (thousands of units) 7) In the above figure, the amount of the tax per unit imposed on the sellers is A) $0.50. B) $1.00. C) $1.50. D) $2.00. 8) In the above figure, the deadweight loss due to the tax is A) $1,000. B) $2,000. C) $4,000. D) $8,000. 9) Suppose Jill's consumption bundle is made up of 2 goods, apples and bottles of juice. If the price of an apple increases, then Jill's budget line would A) not change. B) shift towards the origin on the apples axis only. C) shift towards the origin on both the apples and bottles of juice axes. D) shift away from the origin on the bottles of juice axis only. 10) The marginal utility from the consumption of a good is equal to the A) total utility divided by the quantity consumed. B) total utility divided by the price. C) change in total utility divided by the change in the quantity consumed. D) change in total utility divided by the change in price.

Answer 1

Q7
Answer
The per-unit tax is the vertical distance between S and S+tax
=4-2=$2

Option D
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Q8
Answer
Option A

deadweight loss =per unit tax * 0.5 * change in quantity

before tax equilibrium at Qd=Qs
where
Q=3000 units

after-tax equilibrium at Qd=Qs+tax
where
Q=2000 units
DWL=0.5*2*(3000-2000)=1000
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Q9
Answer
Option B
the budget line shifts insides on the apple axis as the intercept of respective goods represent maximum quantity produced in a given budget so
increase in price apple decreases the maximum quantity can be purchased in the given budget and shifts it inside.

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Q10
Answer
Option C
MU(n)=(TU(n)-TU(p))/(n-p)
MU(n)=marginal utility of n th unit
TU(n)=total utility of n units
TU(n-1)= total utility of n-1 units

MU is a change in utility and divided by the change in quantity