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[jorian23]

44. A $2.00 tax per gallon of paint placed on the sellers of paint will shift the supply curve

a. downward by exactly $2.00.
b. downward by less than $2.00.
c. upward by exactly $2.00.
d. upward by less than $2.00.


____ 45. According to the Coase theorem, in the presence of externalities

a. private parties can bargain to reach an efficient outcome.
b. government assistance is necessary to reach an efficient outcome.
c. the assignment of legal rights can prevent externalities.
d. the initial distribution of property rights will determine the efficient outcome.


____ 46. Producer surplus directly measures

a. the well-being of society as a whole.
b. the well-being of buyers and sellers.
c. the well-being of sellers.
d. sellers’ willingness to sell.


____ 47. Which of the following statements is not correct?

a. A seller would be eager to sell her product at a price higher than her cost.
b. A seller would refuse to sell her product at a price lower than her cost.
c. A seller would be indifferent about selling her product at a price equal to her cost.
d. Since sellers cannot set the price for their product, they must be willing to sell their product at any price.


____ 48. The difference between specific knowledge and general knowledge is that

a. the creation of general knowledge is usually more profitable for the creator.
b. specific knowledge is excludable, while general knowledge is not excludable.
c. general knowledge is excludable, while specific knowledge is not excludable.
d. general knowledge is rival in consumption, while specific knowledge is not rival in consumption.


Table 6-1


Price Quantity
Demanded Quantity
Supplied
$0 12 0
$1 10 2
$2 8 4
$3 6 6
$4 4 8
$5 2 10
$6 0 12


____ 74. Refer to Table 6-1. Which of the following price floors would be binding in this market?

a. $1
b. $2
c. $3
d. $4



____ 75. The single largest expenditure by state and local governments is on

a. highways.
b. police.
c. public welfare.
d. education.


____ 76. Suppose buyers of liquor are required to send $1.00 to the government for every bottle of liquor they buy. Further, suppose this tax causes the effective price received by sellers of liquor to fall by $0.80 per bottle. Which of the following statements is correct?

a. This tax causes the demand curve for liquor to shift downward by $1.00 at each quantity of liquor.
b. The price paid by buyers is $0.20 per bottle more than it was before the tax.
c. Eighty percent of the burden of the tax falls on sellers.
d. All of the above are correct.


____ 77. Private goods are both

a. excludable and nonrival in consumption.
b. nonexcludable and rival in consumption.
c. excludable and rival in consumption.
d. nonexcludable and nonrival consumption.

80. Total surplus is

a. equal to producer surplus plus consumer surplus.
b. equal to the total cost to sellers minus the total value to buyers.
c. equal to consumers' willingness to pay plus producers’ cost.
d. greater than the sum of consumer surplus plus producer surplus.


____ 81. The deadweight loss of an income tax is determined by the

a. amount of total tax revenue to the government.
b. marginal tax rate.
c. average tax rate.
d. ability-to-pay principle.


____ 82. An income tax in which the average tax rate is the same for all taxpayers would be considered a

a. progressive tax.
b. regressive tax.
c. distortion-free tax.
d. proportional tax.


____ 83. If an externality is present in a market, economic efficiency may be enhanced by

a. increased competition.
b. weakening property rights.
c. better informed market participants.
d. government intervention.


____ 84. An alternative to rent-control laws that would not reduce the quantity of housing supplied is

a. the payment by government of a fraction of a poor family’s rent.
b. higher taxes on rental income earned by landlords.
c. a policy that prevents landlords from evicting tenants.
d. a policy that allows government to confiscate residential property for the purpose of commercial development.


____ 85. As government debt increases,

a. Congress will reduce spending by an equal proportion.
b. the government must spend more revenue on interest payments.
c. a trade-off with government deficits is inevitable.
d. tax rates must rise to cover the deficit.


____ 86. In order to determine tax incidence, one must

a. consider issues of equity.
b. also determine the legal liability of the tax.
c. evaluate where the tax burden eventually falls.
d. use the "flypaper theory" of taxation.

[parnell]

46. b
47. d
48. c


quick answers for 75-86 are available by using the information from your text.
The glossary in the back offers definitions to key phrases from your questions.
If you can't find that, try using the 'answers' and looking them up.

Write down what you find out, because a test may switch questions and answers around .

Still need more help? Try the index in the back of the book also, and it will refer you to exact pages that offer more explanations and examples.

example: 86. "tax incidence'