5 hw

Price discrimination is the business practice of

selling the same good at different prices to different customers

State and local government

Use a mix of taxes and fees to generate revenue

A tax imposed at every stage of production is a

Value-added tax

Tax incidence refers to

Who bears the tax burden

Suppose a state has the following individual income tax structure. The first $20,000 that an individual earned this text at 5%. The next 30,000 is taxed at 10%. Any income exceeding 50,000 is taxed at 20%. Based on this text structure of a persons income is equal to 60,000 his average tax rate is equal to

11.67%

Refer to Table 13-7. At which number of workers does diminishing marginal product begin?

3

Jacqui decides to open her own business and earns 50,000 in accounting profit the first year. When deciding to open her own business she withdrew 20,000 from her savings which earned 5% interest. She also turned down three separate job offers with annual salaries of 30,000, 40,000, and 45,000. What is jacqui's economic profit from running her own business?

4,000

Consider a firm that operates in a perfectly competitive market. Currently the firm is producing 50 units of output and at that output level, marginal revenue is $6. Suppose that the firm increases output by 50%. Total revenue will be

450

Scenario 13-13 Christine is an artist who creates custom cookie jars. Her annual revenue from selling the cookie jars is $90,000. The annual explicit costs of the materials used to make the cookie jars are $54,000. Refer to Scenario 13-13. Christine used $5,000 from her personal savings account to buy pottery tools for her business. The savings account paid 1% annual interest. What is Christine's annual opportunity cost of the financial capital that she invested in her business?

50

Each worker at the Wooden Chair Factory costs $12 per hour. The cost of each machine is $20 per day regardless of the number of chairs produced. What is the total daily cost of producing at a rate of 55 chairs per hour if the factory operates 8 hours per day?

520

Which of the following is an example of a tax based on the benefits principle

A toll road

If Bradley's Butcher Shop sells its product in a competitive market, then

Bradley's Butcher Shop's total revenue must be proportional to its quantity of output

which of the following is a characteristic of a competitive market

Buyers and sellers are price takers

The US income tax

Discourages savings

Economists normally assume that the goal of a firm is to

Earn profits as large as possible even if it means reducing output

Economists in the field of industrial organization study how

Firms decisions about prices and quantities depend on market conditions

A country is using a proportional tax when

It's marginal tax rate equals its average tax rate

The deadweight loss of an income tax is determined by the

Marginal tax rate

Sebastian decides to open a tree farm. When deciding to open his own business, he turned down two separate job offers of $25,000 and $30,000 and withdrew $20,000 from his savings. Sebastian's savings account paid 3 percent interest. He also borrowed $20,000 from his brother, whom he pays 2 percent interest per year. He spent $15,000 to purchase supplies and earned $50,000 in revenue during his first year. Which of the following statements is correct?

Sebastian's economic profit is 4,000 and his accounting profit is 34,600

Economists play an important role in the complex debates over tax policy by

Shedding light on the tradeoff between efficiency and equity in tax policy

A person's tax liability refers to

The amount of tax a person owes to the government

An industry is a natural monopoly when

a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.

Suppose that the DeBeers company faces very little competition from other firms in the wholesale diamond market. Why isn't the price of wholesale diamonds $10,000 per carat?

because the company would sell so few diamonds that it would earn higher profits by selling at a lower price

Suppose that the organic-produce industry is composed of a large number of small firms. In recent years, these firms have suffered economic losses, and many sellers have left the industry. Economic theory suggests that these conditions will

cause the market supply to decline and the price of organic produce to rise.

The textile industry is composed of a large number of small firms. In recent years, these firms have suffered economic losses, and many sellers have left the industry. Economic theory suggests that these conditions will

cause the market supply to decline and the price of textiles to rise.

If a monopolist is able to perfectly price discriminate,

consumer surplus and deadweight losses are transformed into monopoly profits

Tom produces commemorative t-shirts in a competitive market. If tom decides to decrease his output, this

decrease his revenue, since his output has decreased and the price remains the same

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then

decreaseing output would increase the firm's profit

In a market characterized by monopoly, the market demand curve is

downward sloping

Which of the following represents the firm's long-run condition for exiting a market?

exit if P<ATC

The benefits principle is used to justify

gasoline taxes

Consider a competitive market with a large number of identical firms. The firms in this market do not use any resources that are available only in limited quantities. In this market, an increase in demand will

increase price in the short run but not in the long run

A firm has market power if it can

influence the market price of the good it sells

For a firm in a competitive market, an increase in the quantity produced by the firm will result in

no change in the product's market price

Economic profit is equal to total revenue minus the

opportunity cost of producing goods and services

When firms in a competitive market have different costs, it is likely that

some firms will earn positive economic profits in the long run

When a monopoly increases its output and sales,

the output effect works to increase total revenue, and the price effect works to decrease total revenue.

The nature of a firm's cost (fixed or variable) depends on the

time horizon under consideration

The US federal government collects about

two-thirds of the taxes in our economy

In the long run a firm that produces and sells textbooks gets to choose

which short-run average total cost curve to use, how many workers to hire, the size of its factories