econ

Abraham drinks Mountain Dew. He can buy as many cans of Mountain Dew as he wishes at a price of $0.55 per can. On a particular day, he is willing to pay $0.95 for the first can, $0.80 for the second can, $0.60 for the third can, and $0.40 for the fourth can. Assume Abraham is rational in deciding how many cans to buy. His consumer surplus is

$0.70

Donald produces nails at a cost of $350 per ton. If he sells the nails for $500 per ton, his producer surplus is

$150

Refer to Scenario 9-2. Suppose the world price of cardboard is $60. Then Boxland's gains from international trade in cardboard amount to

$160

Refer to Figure 8-13. Suppose the government places a $5 per-unit tax on this good. The per-unit burden of the tax on buyers is

$2

Suppose a tax of $5 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 200 units to 100 units. The tax decreases consumer surplus by $450 and decreases producer surplus by $300. The deadweight loss from the tax is

$250

Refer to Figure 8-7. The deadweight loss associated with this tax amounts to

$80, and this figure represents the surplus that is lost because the tax discourages mutually advantageous trades between buyers and sellers

Which of the following require firms to pay to pollute? (i) corrective taxes (ii) tradable pollution permits (iii) pollution regulations

1 and 2

Refer to Figure 8-19. The original tax can be represented by the vertical distance AB. Suppose the government is deciding whether to lower the tax to CD or raise it to FG. Which of the following statements is not correct?

Compared to the original tax, the larger tax will increase tax revenue

Suppose Ukraine subsidizes Ukrainian wheat farmers, while Russia offers no subsidy to Russian wheat farmers. As a result of the Ukrainian subsidy, sales of Ukrainian wheat to Russia

Increase the consumer surplus of russian buyers of wheat.

The largest source of income for the federal government is

Individual income tax

Who once said that taxes are the price we pay for a civilized society?

Oliver Wendell Holmes, Jr.

If a tax takes a constant fraction of income as income rises, it is

Proportional taxes:

Some time ago, the nation of Republica opened up its paper market to international trade. Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper?

Republica began exporting paper as a result of the policy change.

In which of the following instances would the deadweight loss of the tax on airline tickets increase by a factor of 9?

The tax on airline tickets increases from $20 per ticket to $60 per ticket

Suppose that in 2020 the average citizen's federal tax bill is $12,466, and total federal spending is $10,824 per person. In 2020, the federal government will have

a budget surplus

When the social cost curve is above a product's supply curve,

a negative externality exists in the market.

If only a few people are affected by an externality, then it is likely that

a private solution to the inefficiency will occur.

Which tax system requires higher-income taxpayers to pay a higher percentage of their income in taxes?

a progressive tax

Negative externalities occur when one person's actions

adversely affect the well being of a bystander who is not party to the action

Residents of Hong Kong are able to find restaurants that advertise a dish that contains grizzly bear paws. Since it is unlikely that grizzly bear paws are purchased from a private producer of animal paws, we can likely conclude that

allowing individuals to own and raise grizzly bears for meat would likely reduce the threat of extinction to grizzly bear populations.

Which of the following helped reduce sulfur dioxide emissions, a leading cause of acid rain? (i) corrective taxes (ii) tradable pollution permits (iii) amendments to the Clean Air Act

both (ii) and (iii)

If the government decides to build a new highway, the first step would be to conduct a study to determine the value of the project. The study is called a

cost-benefit analysis.

The commercial value of ivory is a threat to the elephant, but the commercial value of beef is a guardian of the cow. This is because

cows are private goods, while elephants tend to roam freely without owners.

Which of the following statements is correct?a. Taxes are more difficult to administer than regulations.b. Command-and-control policies provide incentives for private decision-makers to solve their problems on their own.c. Corrective taxes distort incentives.d. Taxes provide incentives for firms to adopt new methods to reduce negative externalities.

d

Corrective taxes differ from most taxes in that corrective taxes

do not cause deadweight losses.

At any given quantity, the willingness to pay in the market for gasoline is reflected in the

height of the demand curve at that quantity

A consumer's willingness to pay directly measures

how much a buyer values a good

The problem with the protection-as-a-bargaining-chip argument for trade restrictions is

if it fails the country faces a choice between two bad options.

If your income is $50,000, your income tax liability is $10,000, and you paid $0.25 in taxes on the last dollar you earned, your

marginal tax rate is 25 percent.

At present, the maximum legal price for a human kidney is $0. The price of $0 maximizes

neither consumer not producer

Suppose that you want to build a community garden for your neighborhood, which has 500 residents. The cost of the garden is $2,000, and each person values the garden at $3. After a month, you have only received 75 donations at $3 each. The result is that

neither you nor the local government should build the garden.

In the Tragedy of the Commons parable, if the medieval townspeople had foreseen the tragedy, then they could have dealt with the problem in much the same way that modern society deals with

pollution.

When markets fail, public policy can

potentially remedy the problem and increase economic efficiency

Suppose the federal government doubles the gasoline tax. The deadweight loss associated with the tax

quadruples.

Economists normally assume people's preferences should be

respected

A vacation home in Malibu is

rival in consumption and excludable.

Which of the following pairs of goods includes a good that is excludable and rival in consumption as well as a good that is not excludable and not rival in consumption?

tablet computer, national defense

As tax laws become more complex

the administrative burden of taxes will increase.

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade; he argues that everything can be produced at lower cost in other countries. The likely flaw in Congressman Smith's reasoning is that he ignores the fact that

the gains from trade are based on comparative advantage