chapter 9 micro

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

The marginal social cost of producing the last unit of a good is $1.10 while the consumers' willingness to pay for the last unit is $0.80. The deadweight loss from the production of the last unit of the good in equilibrium is ________.

$.30

The government of Lithasia ran a budget deficit of $60,000 in 2017. If the tax revenue of the Lithasian government in 2017 was $320,000,000, how much did the government spend in that year?

$320,060,000

Suppose a market has only one seller and only one buyer of a good in the market. The buyer is willing to pay $50 for the good and the seller is willing to accept $15. The market price of the good is determined at $30. If they trade, the social surplus will be ________.

$35

If Kate pays an average tax rate of 12.5% and her total income is $34,000, she pays ________ as tax.

$4,250

What is the budget surplus if the total amount of taxes collected by a local government is $171,000 and the total amount spent is $90,000?

$81,000

Smoking increases the risk of lung infections not only for active smokers but also for other people inhaling the smoke passively. Which of the following will help in reducing smoking?

A corrective tax

Ron plays loud music, which prevents his neighbor from studying. His neighbor values studying at $5,000, while the cost of soundproofing Ron's room is $3,000. Which of the following problems arises in this scenario?

A negative externality

Which of the following gives rise to a positive externality?

Consumption of a drug to cure a communicable disease

Firm A uses production technology that affects the environment. Which of the following are​ command-and-controlpolicies used by the government to regulate firm​ A?

Firm A is not allowed by the government to produce more than 100 units if it does not use ​environment-friendly technology. and The government makes it compulsory for firm A to use environment friendly technology.

Which of the following statements regarding the Coase Theorem is not ​true?

Initial property right allocation determines whether the socially efficient outcome can be achieved.

Which of the following statements regarding internalizing an externality is​ true?

It means agents account for the full costs and benefits of their actions.

Which of the following is not an​ externality?

Jordan has lung cancer from smoking cigarettes

the marginal social cost curve ___ when production involves negative externalities

Lies above the supply curve

You are the County Commissioner of Hazard County. There is a popular lake for fishing located in eastern Hazard County on​ county-owned park​ land, which is open to the public.​ Recently, the Reed brothers have started using large nets to catch large amounts of​ fish,severely depleting the amount of fish left for other fishermen. The fish in the lake are an example of a common pool resource. What approach would be the least effective way to deal with the overfishing​ problem?

Limit who is allowed to fish in the lake

Which of the following economic tools can be used to solve the tragedy of the​ commons?

Privatization of the resource, Incentives to​self-regulate the use of resources and Pigouvian tax.

Which of the following is an objective of government taxation?

Redistribution of funds

____________ taxes are paid by a buyer as a percentage of the market price of an item.

Sales

In which of the following situations can an externality be internalized by using the Pigouvian​ subsidy?

Sophia's flower garden provides a pleasant view for her neighbors.

Which of the following statements explains the concept of the tragedy of the​ commons?

The open access to common resources results in their depletion through overuse. and It results when the free market equilibrium quantity is higher than the optimal equilibrium quantity.

A manufacturing plant is emitting hazardous gas into the nearby​ area, adversely affecting the local citizens. In which of the following situations does private bargaining not likely to lead to an efficient​ outcome?

When negotiating an agreement on the allowable level of emissions and who gets compensated is difficult.

Vaccination against a disease helps in preventing the spread of the disease. Which of the following can help in increasing the number of people vaccinated to the socially optimal level?

a corrective tax

Which of the following taxes does NOT lead to a deadweight loss?

a lump-sum tax

An externality occurs when _____________.

an economic activity affects third parties not engaged in the activity

Ron plays loud music, which prevents his neighbor from studying. His neighbor values studying at $5,000, while the cost of soundproofing Ron's room is $3,000. If Ron has the right to listen to music at night, how much does his neighbor need to pay him to stop playing music?

any amount between $3,000 and $5,000

A ________ occurs when government spending exceeds tax revenue.

budget deficit

pay per view broadcast are __

club goods

A government regulation that bans the use of a certain polluting technology in the production of a good is an example of a _______ to solve an externality.

command and control approach

the tragedy of the commons results when

common pool resources are overused

You are the County Commissioner of Hazard County.​ Dwight's neighbors bring a complaint before you that​ Dwight's hog farm is creating a terrible odor,and they are demanding government action. You decide to respond to the neighbor's complaints by limiting the number of hogs that Dwight can have on his farm. This is an example of using a command-and-control approach. If you were to recommend a​ command-and-controlapproach, a disadvantage would be that it​ ___________.

creates few incentives for innovation

Which of the following statements are true regarding​ externalities?

deadweight loss can be either a foregone benefit or the total cost of the externality to society

a concert in a crowded auditorium is in ___ consumption

excludable and rival

Three friends stay in an apartment. Their landlord offers to air-condition the apartment if they pay for the installation charges. Although they all want an air-conditioner, none of them say so. This is an example of the __________.

free rider problem

The largest source of the federal tax revenue is

individual income taxes

an economic agent __ when he accounts for the full costs and benefits of his actions

internalizes an externality

Which of the following is the correct definition of marginal social​ cost?

marginal private cost + marginal external cost

A chemical factory releases its byproducts in a nearby river, which harms aquatic flora and fauna. This is an example of a ____________.

negative externality

The Coase theorem relies on internalizing externalities through ____________.

negotiations between the parties involved

space on a popular, public beach is __ in consumption

non excludable but rival

Five players are given $10 each and asked to contribute any portion of it to a group account. They are also told that the total collection will be doubled and distributed equally among each of them. In this case, the players are likely to contribute __________.

nothing

Which of the following goods have a high​ excludability?

ordinary private goods and club goods

Which of the following best illustrates the tragedy of the​ commons?

overfishing in public waters

Taxes listed as Federal Insurance Contribution Act taxes on the employee paystub are

payroll taxes

The Coase Theorem states that​ ____________.

private bargaining will result in an efficient allocation of resources

A ________ tax system is one in which tax rates increase with taxable base incomes.

progressive

The Coase Theorem will breakdown when​ ____________.

property rights are not clearly defined and there are a large number of agents

Local governments usually rely on the ___________ tax to fund schools, libraries, and public services such as police and fire protection.

property taxes

A restaurant charges its customers 12% of the total food price as tax. This is an example of a _________ tax.

sales

Which of the following can give rise to a negative externality?

smoking a cigarette

The term ________ refers to how the burden of the tax is distributed across various agents in the economy.

tax incidence

The tax incidence on sellers is higher if

the buyers are more sensitive to price changes than the sellers

The production of steel in a factory generates a negative externality. A per-unit tax on the factory that equals ________ of steel production will internalize the externality entirely.

the marginal external cost

When a Pigouvian tax is imposed, ____________.

the marginal private cost curve shifts upward

In a progressive tax system,

the marginal tax rate exceeds the average tax rate

The burden of a tax falls entirely on buyers if

the price elasticity of demand is zero (perfectly inelastic)

The burden of a tax falls entirely on sellers if

the price elasticity of supply is zero (perfectly inelastic)

If a tax is imposed on each unit of a good purchased,

the supply curve for the good shifts to the left

If a tax is imposed per unit of a good sold,

the supply curve for the good shifts to the left

A retired athlete built a gym near his house that could be used for free by all the residents in the neighborhood. However, the overuse of the facilities soon led to irreparable damages. This is an example of the _________.

tragedy of the commons

If production of a good gives rise to a negative externality, it can be internalized by taxing the producers of the good. (t/f)

true

The central as well as the local governments collect taxes in the U.S. (t/f)

true


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