Econ Quiz 9-12

Wealth, earnings, and disposable income are just three of several ways of looking at inequality. Imagine a household that earns $80,000 per year from labor. In that year, it also receives an income of $3,000 from investments, pays $12,000 in tax, and receives $7,000 in benefits from the state. Which of the following is an accurate statement of its market income and its disposable income?

$83,000 $78,000.

Which of the following is an example of a negative externality?

A commuter driving to work instead of taking public transportation

Which of the following statements are correct?

A market is in equilibrium if the actions of buyers and sellers have no tendency to change the price or the quantities bought and sold.

Consider again the figure in Question 3. The government could implement four different policies to ensure the Pareto efficient outcome. When 38,000 bananas are produced, the difference between the marginal social cost (MSC) and the marginal private cost (MPC) is $105. In which of the following policies do the banana producers make the highest profit?

Coasean bargaining when the banana producers have the right to pollute.

Which of the following statements about merit goods is correct?

Emergency healthcare is a merit good.

Which of the following is the best example of a non-excludable public good?

Free WiFi

Which of the following goods is not allocated by markets in the U.S. because doing so is widely viewed as repugnant?

Human kidneys

Which of the following statements regarding monopoly and perfectly competitive markets are correct?

In a monopoly market, the firm is a price-setter.

Which of the following statements most accurately summarizes recent trends in global income inequality, as presented in Unit 19.1?

Inequality between countries is declining, while within-country inequality is rising, with the net effect being falling global inequality.

Which of the following statements are correct?

Market failures happen because market prices do not always take into account of the full effect of their actions on others.

A bakery is one of many that operate in the bread industry. The market demand curve for bread is downward-sloping. The bakery incurs fixed costs and has an upward-sloping marginal cost curve. Which of the following statements is correct?

The bakery faces a flat demand curve.

Consider the case where a government introduces a specific tax on cigarettes, which reduces the consumption of cigarettes. Which of the following statements is correct?

The cost of collecting taxes must be considered when assessing the success of this policy.

Consider the perfectly competitive market for bread analyzed in Unit 8. Why is the competitive equilibrium Pareto efficient?

The gains from trade are maximized.

In which of the following markets is the equilibrium efficient?

The market for a homogenous good that has no external effect

Which of the following markets best approximates perfect competition?

The market for milk.

Consider the figure in Question 1. Suppose instead the government decides to impose a specific (or fixed) tax of T per kg of salt, to be paid by the suppliers. Which of the following statements is correct?

The supply curve shifts up in a parallel manner.

In Guadeloupe and Martinique, the use of pesticide chlordecone on banana plantations devastated fishing communities downstream. Which of the following statements is correct?

This was an example of a social dilemma.

There are five students who are looking to buy one second-hand textbook each. Their willingness-to-pay are £5, £6, £8, £12, and £15, respectively. Based on this information, which of the following statements is correct?

To sell three books, the maximum price that can be charged is £8.

Wealth is usually more unequally distributed than earnings. This is mainly because:

Wealth is accumulated savings that can be passed on from parents to children.