Econ
You are interested in playing a card game. The rules of the game are such that you pick a card from a deck of cards and if the card is a diamond, you win $4040. The catch is, every time you want to pick a card you have to pay the dealer a fee of $44. A standard deck of cards consists of 52 cards, with 13 diamonds in the deck of cards. The probability of picking a diamond is ___________ and the probability of not picking a diamond is ___________.
1/4, 3/4
Name the correct factor associated with government taxation and spending decisions from the given scenarios:Government increases taxes as a result of a budget deficit.
Correcting market failures and externalities
Name the correct factor associated with government taxation and spending decisions from the given scenarios:Government increases taxes in order to pay the salary of the doctors working in government owned hospitals.
Financing operations.
Is the entire burden of the tax always borne by those on whom it is imposed?
Not necessarily, since the burden of the tax depends on price elasticity.
Name the correct factor associated with government taxation and spending decisions from the given scenarios:Government issues bonds for the construction of a new plant that treats the waste products emitted from the big factories.
Raising revenues.
Name the correct factor associated with government taxation and spending decisions from the given scenarios: Government provides health services to individuals who are incapable of paying for it.
Redistributing funds via transfer payments.
Based on the given information in the table below, identify the category of risk preference:Kat prefers an investment with a guaranteed rate of return of 10 percent over an investment that has a 50-50 chance of 20 percent and 0 percent returns.
Risk aversion
Based on the given information in the table below, identify the category of risk preference: Kyra is indifferent between an investment with a 50-50 chance of 30 percent and 0 percent returns and an investment with a guaranteed rate of return of 15 percent.
Risk neutrality
Based on the given information in the table below, identify the category of risk preference: Diana prefers the investment with a 50-50 chance of 40 percent and 0 percent returns over an investment that has a guaranteed rate of return of 20 percent.
Risk seeking
The idea of leaving all the money in an account and earning interest not only on the original deposit but also on the past interest earned is called ____________. Part 5
compounding
The incidence of the tax falls entirely on producers because ____________.
consumers are infinitely price sensitive.
Consumer sovereignty suggests that
government should not interfere with consumer choices.
This process implies that future rewards are worth MORE OR LESS than current rewards.
less
To value the delayed benefits, economists weight the reward by
multiplying the reward by a positive factor that is less than 1.
Paternalism is the view that
people do not always know what is best for them, and government should encourage them to make the right choices.
Economists have done numerous studies on how much risk people willing to take in a variety of situations. They have found that in most situations people overall are ____.
risk averse
The fact that most extended warranties that are offered on smaller electronic purchases tend to cost more than the benefits they provide it is likely true that firms ____.
sell many extended warranties since people are willing to pay extra to avoid the risk of a loss
The tax paid while purchasing a cocktail at a bar is levied by
the federal government.
ABC Ltd., is an international company that pays taxes every year on its profits. This particular tax is levied by
the federal, state, and/or local governments.
An outcome is described to be risky when
the outcome of either a good or bad event is not known in advance.
Dereck sold his shop to Jazz who wants to open a new salon. Dereck had to pay taxes on the sale of his shop. This tax is levied by
the state and local governments.
FDA regulations aimed at ensuring that new drugs that are marketed do, in fact, have the functions they are supposed to have are necessary because:
verification by each consumer would be extremely inefficient.
Tax incidence refers to ____________.
who bears the burden of a tax.
One cost associated with higher income taxes is that people might choose to work less. The empirical studies reveal various estimates of labor supply elasticities. Can you think of another empirical approach to estimate labor supply elasticities? (Hint: Be sure to have exogenous variation so that you can make a causal statement.) When comparing elasticities of labor supply for jobs with various barriers to entry (such as certifications or degree requirements), you would expect to find a more _______ labor supply for jobs with more entry barriers, since those who get through the barriers will be _______ to employers.
inelastic; more valuable