The market for a certain brand of ceiling fan in Coimbatore is described by
and
, where
is in rupees. The government imposes a tax of Rs. 25 per fan, collected from buyers. Tax revenue and deadweight loss are, respectively:
Rs. 12,000 and Rs. 750
Rs. 10,500 and Rs. 1,500
Rs. 10,500 and Rs. 750
Rs. 10,500 and Rs. 375
Consider the following statements and select the correct option.
Statement I: A tax that raises no revenue for the government cannot create any deadweight loss. Statement II: A tax that creates no deadweight loss cannot raise any revenue.
Both statements are true.
Statement I is true; Statement II is false.
Statement I is false; Statement II is true.
Both statements are false.
A per-unit tax is imposed on cinema tickets in a town where demand is highly elastic while supply is highly inelastic. Which of the following is correct?
Buyers bear most of the burden, because the tax is collected at the box office.
Sellers bear most of the burden, and the deadweight loss is smaller than it would be in an otherwise identical market where both curves were elastic.
Sellers bear most of the burden, and the deadweight loss is larger than it would be in an otherwise identical market where both curves were elastic.
The burden is split equally, since the tax wedge is the same on both sides
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The IIT Madras BS Principles of Economics (Principles of Economics) Quiz 2 paper sat on Undated, in the Undated: 25 questions for 25 marks in 120 minutes. The first 3 questions are below. Sign in with Google — it is free — to see the whole paper with its answers and explanations, in learning mode or as a timed mock test.
| Feature | Principles of Economics Quiz 2 Undated at a glance |
|---|---|
| Term | Undated |
| Subject | Principles of Economics |
| Questions | 25 |
| Marks | 25 |
| Duration | 120 min |
| MCQ | 25 |
| Negative marking | No negative marking. |
| Updated |
