Micro Econ exam 3
Suppose the cost to install each streetlight is $900 and the families have agreed to split the cost of installing the streetlights equally. If the residents choose to install the number of streetlights that will maximize total surplus from the streetlights, how much total surplus will the Greene family receive?
$0
This graph represents the tobacco industry. The socially optimal price and quantity are
$1.80 and 35 units, respectively
What is the marginal tax rate for a person who makes $60,000?
40%
With the tariff, the quantity of saddles imported is
Q3-Q2
Which Senator is advocating taxes based on the benefits principle?
Senator Filch
Without government intervention
The equilibrium quantity is larger than the socially optimal quantity.
This country
all of the above are correct
This market is characterized by
negative externality
Taking into account private value and external benefits, the maximum total surplus that can be achieved in this market is
$13,230
If this country chooses to trade, the price of the calculators in this country will be
$20 and 80 calculators will be sold domestically
As a result of trade, total surplus increase by
$250
Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $30,000?
$3,000 and 10 percent, respectively
Taking only private value and private cost into account, total surplus at the market equilibrium amount to
$4,320
Athos, Porthos,and Aramis each like to take fencing lessons. The price of a fencing lesson is $11. Athos values a lesson at $16, Porthos at $14, and Aramis at $12. Suppose that if the government taxes fencing lessons at $2 each, the price will rise to $13. A consequence of the tax is that consumer surplus shrinks by
$5 and tax revenues increase by $4, so there is a dead weight loss of $1
Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $50,000?
$6,000 and 20 percent, respectively
With trade, consumer surplus is
$6,760
With trade, total surplus is
$7,760
The private value of the 200th unit of plastic exceeds the social cost of the 200th unit of plastic by
$8
f the government wanted to reduce pollution from 16 units to 6 units, which of the following fees per unit of pollution would achieve that goal?
$83
Without trade, consumer surplus is
$845
In the absence of trade, the equilibrium price of coffee in Guatemla is
$90
Suppose the cost to build the park is $24 per acre and that the residents have agreed to split the cost of building the park equally. To maximize his own surplus, how many acres would Cedric like Springfield to build?
0 acres
With trade, total surplus in the Guatemalan coffee market amounts to
1,870
The graph depicts the market for fertilizer. What is the socially optimal quantity of fertilizer?
200 Units
Bert faces a progressive tax structure that has the following marginal tax rates: 0 percent on the first $10,000, 10 percent on the next $10,000, 15 percent on the next $10,000, 25 percent on the next $10,000, and 50 percent on all additional income. If Bert earns $75,000, what is his average tax rate?
30 percent
What type of tax structure did the US have in 2009 for single individuals?
A progressive tax structure
20 percent of the first $40,000 of her income;30 percent of all her income above $40,000. Refer to Scenario 12-4. The taxpayer faces
An average tax rate of 22 percent when her income is $50,000
Karen's cat causes Danny to sneeze. Karen values her cat's companionship at $300 per year. The cost to Danny of tissues and her allergy medication is $350 per year. Based on the Coase theorem,
Danny should pay Karen $325 to give away her cat
Which of the following statements is accurate?
Producer surplus with trade is $375
If all external costs were internalized, then the market's equilibrium output would be
Q2
A result of the tariff is that, relative to the free-trade situation, the quantity of saddles imported decreases by
Q4-Q3 + Q2-Q1
Which Senator is advocating for taxes based on horizontal equity?
Senator Malfoy
Which senator is advocating taxes based on a person's ability to pay?
Senators Fudge and Malfoy only
Which of the three tax systems is progressive?
Tax system B
Which of the three tax systems is regressive?
Tax system B
Which of the three tax systems is regressive?
Tax system c
At the world price and with free trade
The calculator market is in equilibrium
Which of the following magnitudes is constant over all units of output
The external benefit of the last unit of output that was produced and sold
Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of tricycles to an exporter of tricycles?
Within this country, the price of a substitute for tricycles decreases
If this country allows free trade in tricycles
consumers will gain more than producers will lose
With free trade, this country will
export 100 calculators
Suppose Tyler values a basketball at $20. Jacqui values a basketball at $25. The pre-tax price of a basketball $10. The government imposes a tax of $5 on each basketball, and the price rises to $15. The deadweight loss from the tax is
$0
The increase in total surplus resulting from trade is
$1,280, since consumer surplus increases by $3,520 and producer surplus falls by $2,240
This graph represents the tobacco industry. Without any government intervention, the equilibrium price and quantity are
$1.60 and 42 units, respectively
With trade, the price of tricycles in this country is
$11, with 200 tricycles produces in this country and another 320 imported
Suppose the cost to run the ferry for each roundtrip is $750. Then total surplus for the 4 business owners is
$150 if there are 3 ferry trips
Without trade, producer surplus amounts to
$3,240
Two firms, A and B, each currently dump 50 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. It costs Firm A $100 for each ton of pollution that it eliminates before it reaches the river, and it costs Firm B $50 for each ton of pollution that it eliminates before it reaches the river. The government gives each firm 20 pollution permits. Government officials are not sure whether to allow the firms to buy or sell the pollution permits to each other. What is the total cost of reducing pollution if firms are not allowed to buy and sell pollution permits from each other? What is the total cost of reducing pollution if the firms are allowed to buy and sell permits from each other?
$4,500;$3,500
The change in total surplus in Nicaragua because of trade is
$625, and this is an increase in total surplus
20 percent of the first $40,000 of her income;30 percent of all her income above $40,000. Refer to Scenario 12-4. At what level of income would the taxpayer's marginal tax rate be 30 percent and her average tax rate be 25 percent
$80,000
If the government charged a fee of $84 per unit of pollution, how many units of pollution would the firms eliminate all together?
10
If the government charged a fee of $85 per unit of pollution. How many units of pollution would the firms eliminate all together?
12
Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What is the average tax rate when income is $50,000?
12 percent
Suppose, on the figure, Q represents the quantity of education and P represents the price of education. Then the quantity Q2-Q1 represents
an inefficiency
If this market is currently producing at Q4, then total economic well-being would be maximized if output
decreased to Q2
The horizontal line at the world price of tricycles represents the
supply of tricycles from the rest of the world
This market
would benefit from a tax on the product
The income tax requires that taxpayers pay 10 percent on the first $50,000 of income and 20 percent on all income over $50,000. Andy paid $9,000 in taxes. What were his marginal and average tax rates?
20 percent and 13 percent
20 percent of the first $40,000 of her income;30 percent of all her income above $40,000. Refer to Scenario 12-4. The taxpayer faces a marginal tax rate of
20 percent when her income rises from $30,000 to $30,001
What is the marginal tax rate for a person who makes $37,000?
20%
Suppose the government imposes a tax of 20 percent on the first $50,000 of income and 30 percent on all income above $50,000. What is the average tax rate when income is $60,000?
21.7 percent
The graph depicts the market for fertilizer. Without any government regulation, how much fertilizer will be produced?
250 Units
Suppose the cost to build the park is $24 per acre. How many acres should the park be to maximize total surplus from the park in Springfield?
3 acres
Suppose the cost to install each streetlight is $360 and the families have agreed to split the cost of installing the streetlights equally. To maximize their own surplus, how many streetlights would the Greene's like the town to install?
3 street lights
Suppose the cost to install each streetlight is $360 and the families have agreed to split the cost of the streetlights equally. If the families vote to determine the number of streetlights to install, basing their decision solely on their own willingness to pay (and trying to maximize their own surplus), what is the greatest number of streetlights for which the majority of families would vote "yes?"
4 street lights
Suppose the cost to install each streetlight is $360. How many streetlights should the town install to maximize total surplus from the streetlights?
4 street lights
A benevolent social planner would prefer
420 units to any other quantity of output
Suppose the cost to build the park is $9 per acre. How large should the park be to maximize total surplus from the park in Springfield?
5 acres
Suppose the cost of cleaning the lake is $20 per hour, and that the residents have agreed to split the cost of cleaning the lake equally. If the residents vote to determine the number of hours spent cleaning the lake, basing their decision solely on what maximizes their own surplus, what is the most number of hours for which all four residents would vote "yes?"
5 hours
Suppose that the production of plastic creates a social cost which is depicted in the graph above. Without any government regulation, how much plastic will be produced?
650
Consumer surplus with the tariff is
A+B
In the absence of trade, total surplus in Guatemala is represented by the area
A+B+C+D+F
Which of the following is a valid equation for Welsh consumer surplus with trade?
Consumer surplus with trade= (1/2)(Q1)(P3-P1)
The amount of government revenue created by the tariff is
E
With trade, Wales
Exports Q2-Q1 units of cheese
Two firms, A and B, each currently dump 50 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government will sell 40 pollution permits for $75 each. It costs Firm A $100 for each ton of pollution that it eliminates before it reaches the river, and it costs Firm B $50 for each ton of pollution that it eliminates before it reaches the river. Neither firm produces any less output, but they both conform to the law. It is likely that between the cost of permits and the cost of additional pollution abatement,
Firm A will spend $4,000
Two firms, A and B, each currently dump 20 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government gives each firm 10 pollution permits, which it can either use or sell to the other firm. It costs Firm A $100 for each ton of pollution that it eliminates before it reaches the river, and it costs Firm B $50 for each ton of pollution that it eliminates before it reaches the river. After the two firms buy or sell pollution permits from each other, we would expect that
Firm B will no longer pollute. and Firm A will not reduce its pollution at all
For the saddle market, area E represents
Government's revenue from the tariff
From the figure it is apparent that
Guatemala will export coffee if trade is allowed
With trade, Nicaragua
Imports 250 calculators
When trade in coffee is allowed, producer surplus in Guatemala
Increases by the area B+D+G
Abe owns a dog; the dog's barking annoys Abe's neighbor, Jenny. Suppose that the benefit of owning the dog is worth $200 to Abe and that Jenny bears a cost of $400 from the barking. Assuming Abe has the legal right to keep the dog, a possible private solution to this problem is that
Jenny pays Abe $300 to give the dog to his parents who live on an isolated farm
Mary and Cathy are roommates. Mary assigns a $30 value to smoking cigarettes. Cathy values smoke-free air at $15. Which of the following scenarios is a successful example of the Coase theorem?
Mary pays Cathy $16 so that Mary can smoke.
This graph represents the tobacco industry. The industry creates
Negative externalities
Which of the following is a valid equation for Welsh producer surplus with trade?
None of the above is correct
The equilibrium price and the equilibrium quantity of cheese in Wales before trade are
P0 and Q0
With trade and without a tariff, the price and domestic quantity demanded are
P1 and Q4
Suppose the cost to run the ferry for each roundtrip is $750 per day and the 4 business owners have agreed to split the costs of the ferry trips equally. Which of the following statements is correct?
The owner of Store A would prefer to have 1 ferry trip
Bearing in mind that this country is "small," what would happen if there were a decrease in the price of tricycle helmets within this country, given that tricycles and tricycle helmets and complements?
The quantity of tricycles that this country imports would increase
Which of the following statements is correct?
To induce firms to internalize the externalize in this market, the government should impose a tax measured by P2-P0.