MicroEconomics/ prof. X __ch. 10-15
A consumption tax is a tax on a. goods but not on services. b. the amount of income that people spend. c. the amount of income that people earn. d. the amount of income that people save.
b
A firm cannot price discriminate if a. its has declining marginal revenue. b. it operates in a competitive market. c. buyers only reveal the price they are willing to pay for the product. d. it has a constant marginal cost.
b
A firm cannot price discriminate if it a. has perfect information about consumer demand. b. operates in a competitive market. c. faces a downward-sloping demand curve. d. is regulated by the government.
b
A key characteristic of a competitive market is that a. government antitrust laws regulate competition. b. producers sell nearly identical products. c. firms minimize total costs. d. firms have price setting power.
b
A person's marginal tax rate equals a. her tax obligation divided by her average tax rate. b. the increase in taxes she would pay as a percentage of the rise in her income. c. her tax obligation divided by her income. d. the increase in taxes if her average tax rate were to rise by 1percent.
b
A positive externality will cause a market to produce a. more than is socially desirable. b. less than is socially desirable. c. the socially optimal equilibrium amount. d. more than the same market would produce in the presence of a negative externality.
b
A production function describes a. how a firm maximizes profits. b. how a firm turns inputs into output. c. the minimal cost of producing a given level of output. d. the relationship between cost and output.
b
Accounting profit is equal to a. marginal revenue minus marginal cost. b. total revenue minus the explicit cost of producing goods and services. c. total revenue minus the opportunity cost of producing goods and services. d. average revenue minus the average cost of producing the last unit of a good or service.
b
An optimal tax on pollution would result in which of the following? a. Producers will choose not to produce any pollution. b. Producers will internalize the cost of the pollution. c. Producers will maximize production. d. The value to consumers at market equilibrium will exceed the social cost of production.
b
Excludability is the property of a good whereby a. one person's use diminishes other peoples' use. b. a person can be prevented from using it. c. the government rations the quantity of a good that is available. d. the resource is congestible.
b
Figure 14-10 In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. Refer to Figure 14-10. If there are 700 identical firms in this market, what is the value of Q1? a. 140,000 b. 210,000 c. 280,000 d. 420,000
b
For a firm, the relationship between the quantity of inputs and quantity of output is called the a. profit function. b. production function. c. total-cost function. d. quantity function.
b
For a monopoly, the socially efficient level of output occurs where a. marginal revenue equals marginal cost. b. average revenue equals marginal cost. c. marginal revenue equals average total cost. d. average revenue equals average total cost.
b
Goods that are not rival in consumption include both a. private goods and common resources. b. club goods and public goods. c. common resources and public goods. d. private goods and club goods.
b
Goods that are rival in consumption but not excludable would be considered a. club goods. b. common resources. c. public goods. d. private goods.
b
In the United States, the marginal tax rate on individual federal income tax a. decreases as income increases. b. increases as income increases. c. is constant at all income levels. d. applies only to payroll taxes.
b
Katya owns a math-tutoring business. Her accountant most likely includes which of the following costs on her financial statements? (i) workbooks containing practice problems (ii) rent for the storefront (iii) wages Katya could earn as a bookkeeper (iv) interest that Katya's money was earning before she spent her savings to set up the tutoring business (i) only (i) and (ii) only (iii) and (iv) only (i), (ii), (iii), and (iv)
b
Laura is a gourmet chef who runs a small catering business in a competitive industry. Laura specializes in making wedding cakes. Laura sells 20 wedding cakes per month. Her monthly total revenue is $5,000. The marginal cost of making a wedding cake is $300. In order to maximize profits, Laura should a. make more than 20 wedding cakes per month. b. make fewer than 20 wedding cakes per month. c. continue to make 20 wedding cakes per month. d. We do not have enough information to answer the question.
b
Monopoly firms have a. downward-sloping demand curves, so they can sell as much output as they desire at the market price. b. downward-sloping demand curves, so they can sell only the specific price-quantity combinations that lie on the demand curve. c. horizontal demand curves, so they can sell as much output as they desire at the market price. d. horizontal demand curves, so they can sell only a limited quantity of output at each price.
b
Positive externalities a. result in a larger than efficient equilibrium quantity. b. result in smaller than efficient equilibrium quantity. c. result in an efficient equilibrium quantity. d. can be internalized with a corrective tax.
b
Price discrimination is the business practice of a. bundling related products to increase total sales. b. selling the same good at different prices to different customers. c. pricing above marginal cost. d. hiring marketing experts to increase consumers' brand loyalty.
b
Profit is defined as a. net revenue minus depreciation. b. total revenue minus total cost. c. average revenue minus average total cost. d. marginal revenue minus marginal cost.
b
Refer to Figure 15-7. In order to maximize profits, the monopolist should produce a. 9 units. b. 12 units. c. 15 units. d. more than 15 units.
b
Refer to Figure 15-8. What is the area of deadweight loss? a. the rectangle (A-C)*X b. the triangle 1/2[(A-C)*(Y-X)] c. the triangle 1/2[(A-B)*(Y-X)] d. the rectangle (A-C)*X plus the triangle 1/2[(A-C)*(Y-X)]
b
Refer to Figure 15-9. The deadweight loss caused by a profit-maximizing monopoly amounts to a. $250. b. $500. c. $750. d. $1,000.
b
Refer to Figure 15-9. To maximize its profit, a monopolist would choose which of the following outcomes? a. 100 units of output and a price of $20 per unit b. 100 units of output and a price of $40 per unit c. 150 units of output and a price of $30 per unit d. 200 units of output and a price of $40 per unit
b
A monopolist faces a a. horizontal demand curve. b. vertical demand curve. c. downward-sloping demand curve. d. U-shaped demand curve.
c
A monopoly market is characterized by a many buyers and sellers. b. "natural" products. c. barriers to entry. d. a Nash equilibrium.
c
A positive externality a. is a benefit to the producer of the good. b. is a benefit to the consumer of the good. c. is a benefit to someone other than the producer and consumer of the good. d. results in an optimal level of output.
c
Corporate profits are a, included in payroll taxes. b. exempt from taxes. c. taxed twice, once as profit and once as dividends. d. taxed to pay for Medicare.
c
Corporate profits are a. included in payroll taxes. b. exempt from taxes. c. taxed twice, once as profit and once as dividends. d. taxed to pay for Medicare.
c
Corporate profits distributed as dividends are a. tax free. b. taxed once. c. taxed twice. d. taxed three times.
c
Figure 14-9 In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. Refer to Figure 14-9. If there are 300 identical firms in this market, what level of output will be supplied to the market when price is $1.00? a. 300 b. 6,000 c. 30,000 d. 60,000
c
Figure 14-9 In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. Refer to Figure 14-9. If there are 600 identical firms in this market, what is the value of Q1? a. 6,000 b. 12,000 c. 60,000 d. 120,000
c
For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $7 and a marginal cost of $10. It follows that the a. production of the 100th unit of output increases the firm's profit by $3. b. production of the 100th unit of output increases the firm's average total cost by $7. c. firm's profit-maximizing level of output is less than 100 units. d. production of the101st unit of output must increase the firm's profit by more than $3.
c
For a firm to price discriminate, a. it must be a natural monopoly. b. it must be regulated by the government. c. it must have some market power. d. consumers must tell the firm what they are willing to pay for the product.
c
For a firm, the production function represents the relationship between a. implicit costs and explicit costs. b. quantity of inputs and total cost. c. quantity of inputs and quantity of output. d. quantity of output and total cost.
c
Goods that are not excludable include both a. private goods and public goods. b. club goods and common resources. c. common resources and public goods. d. private goods and club goods.
c
Goods that are rival in consumption include both a. club goods and public goods. b. public goods and common resources. c. common resources and private goods. d. private goods and club goods.
c
If a competitive firm is selling 500 units of its product at a price of $8 per unit and earning a positive profit, then a. its average revenue is greater than $8. b. its marginal revenue is less than $8. c. its total cost is less than $4,000. d. All of the above are correct.
c
If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit, then a. its total cost is more than $9,000. b. its marginal revenue is less than $10. c. its average total cost is less than $10. d. the firm cannot be a competitive firm because competitive firms cannot earn positive profits.
c
If a social planner were running a monopoly, that planner could achieve an efficient outcome by charging the price that is determined by the a. minimum point on the average total cost curve. b. intersection of the average total cost curve and the demand curve. c. intersection of the marginal cost curve and the demand curve. d. intersection of the marginal cost curve and the marginal revenue curve.
c
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 a. marginal tax rate is 20 percent. b. average tax rate is 5 percent. c. marginal tax rate is 25 percent. d. average tax rate is 25 percent.
c
In a competitive market, the actions of any single buyer or seller will a. discourage entry by competitors. b. influence the profits of other firms in the market. c. have a negligible impact on the market price. d. Both a and b are correct.
c
In a competitive market, the actions of any single buyer or seller will a. discourage entry by competitors. b. influence the profits of other firms in the market. c. have a negligible impact on the market price. d. None of the above is correct.
c
Monopolies use their market power to a. charge prices that equal minimum average total cost. b. increase the quantity sold as they increase price. c. charge a price that is higher than marginal cost. d. dump excess supplies of their product on the market.
c
Private markets fail to account for externalities because a. externalities don't occur in private markets. b. sellers include costs associated with externalities in the price of their product. c. decisionmakers in the market fail to include the costs of their behavior to third parties. d. the government cannot easily estimate the optimal quantity of pollution.
c
Private markets fail to reach a socially optimal equilibrium when negative externalities are present because a. social costs equal private costs at the private market solution. b. private costs exceed social costs at the private market solution. c. social costs exceed private costs at the private market solution. d. they internalize externalities.
c
Profit is defined as total revenue a. plus total cost. b. times total cost. c. minus total cost. d. divided by total cost.
c
Refer to Figure 15-7. A profit-maximizing monopolist would earn profits of a. $96. b. $117. c. $120. d. $126.
c
Refer to Figure 15-7. In order to maximize profits, the monopolist should charge a price of a. $9. b. $12. c. $20. d. $23.
c
Refer to Figure 15-9. To maximize total surplus, a benevolent social planner would choose which of the following outcomes? a. 100 units of output and a price of $20 per unit b. 150 units of output and a price of $20 per unit c. 150 units of output and a price of $30 per unit d. 200 units of output and a price of $20 per unit
c
Scenario 13-13 Christine is an artist who creates custom cookie jars. Her annual revenue from selling the cookie jars is $90,000. The annual explicit costs of the materials used to make the cookie jars are $54,000. Refer to Scenario 13-13. Christine could earn $6,000 per year preparing taxes. In calculating the economic profit of her cookie jar business, the $6,000 that Christine gives up is counted as part of her business's a. total revenue. b. explicit costs. c. implicit costs. d. marginal costs.
c
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? a. both are 10 percent b. 10 percent and $2,000, respectively c. $3,000 and 10 percent, respectively d. $3,000 and 20 percent, respectively
c
Table 12-4 Income Tax rate $0 to $40,000 25% $40,000 to $100,000 40% Over $100,000 60% Refer to Table 12-4. What is the marginal tax rate for a person who makes $50,000? a. 25% b. 28% c. 40% d. 60%
c
Table 12-5 Income Tax rate $0 to $50,000 20% $50,001 to $100,000 40% Over $100,000 60% Refer to Table 12-5. What is the marginal tax rate for a person who makes $60,000? a. 20% b. 23% c. 40% d. 45%
c
Table 14-1 Quantity Price 0 $5 1 $5 2 $5 3 $5 4 $5 5 $5 6 $5 7 $5 8 $5 9 $5 Refer to Table 14-1. The price and quantity relationship in the table is most likely a demand curve faced by a firm in a a. monopoly. b. concentrated market. c. competitive market. d. strategic market.
c
Table 14-10 Suppose that a firm in a competitive market faces the following revenues and costs: Quantity Total Revenue Total Cost 0 $0 $3 1 $7 $5 2 $14 $9 3 $21 $15 4 $28 $23 5 $35 $33 6 $42 $45 7 $49 $59 Refer to Table 14-10. If the firm produces the profit-maximizing level of production, how much profit will the firm earn? a. $2 b. $4 c. $6 d. $8
c
Table 14-10 Suppose that a firm in a competitive market faces the following revenues and costs: Quantity Total Revenue Total Cost 0 $0 $3 1 $7 $5 2 $14 $9 3 $21 $15 4 $28 $23 5 $35 $33 6 $42 $45 7 $49 $59 Refer to Table 14-10. This firm should continue to produce and sell units as long as the marginal cost of production is less than or equal to a. $3. b. $5. c. $7. d. $9.
c
The federal taxes owed by a taxpayer depend a. only upon the marginal tax rate on the taxpayer's first $25,000 of income. b. only upon the marginal tax rate on the taxpayer's last $10,000 of income. c. upon all the marginal tax rates up to the taxpayer's overall level of income. d. upon all the marginal tax rates, including those for income levels that exceed the taxpayer's overall level of income.
c
Tim earns income of $60,000 per year and pays $21,000 per year in taxes. Tim paid 20 percent in taxes on the first $30,000 he earned. What was the marginal tax rate on the second $30,000 he earned? a. 20 percent b. 30 percent c. 50 percent d. 70 percent
c
Total cost is the a. amount a firm receives for the sale of its output. b. fixed cost less variable cost. c. market value of the inputs a firm uses in production. d. quantity of output minus the quantity of inputs used to make a good.
c
Total revenue equals a. marginal revenue - marginal cost. b. price/quantity. c. price x quantity. d. output - input.
c
Which of the following is an example of an implicit cost? (i) the owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm (ii) interest paid on the firm's debt (iii) rent paid by the firm to lease office space a. (ii) and (iii) only b. (i) and (iii) only c. (i) only d. (iii) only
c
Which of the following is not a characteristic of a competitive market? a. Buyers and sellers are price takers. b.Each firm sells a virtually identical product. c. Entry is limited. d. Each firm chooses an output level that maximizes profits.
c
Which of the following statements is correct? a. Opportunity costs equal explicit minus implicit costs. b. Economists consider opportunity costs to be included in a firm's total revenues. c. Economists consider opportunity costs to be included in a firm's costs of production. d. All of the above are correct.
c
A good is excludable if a. one person's use of the good diminishes another person's enjoyment of it. b. the government can regulate its availability. c. it is not a normal good. d. people can be prevented from using it.
d
A monopoly market a. always maximizes total economic well-being. b. always minimizes consumer surplus. c. generally fails to maximize total economic well-being. d. generally fails to maximize producer surplus.
d
A positive externality a. causes the product to be overproduced. b. provides an additional benefit to market participants. c. benefits consumers because it results in a lower equilibrium price. d. is a benefit to a market bystander.
d
A tax on the wages that a firm pays its workers is called a. an income tax. b. an excise tax. c. a consumption tax. d. a payroll tax.
d
An entrepreneur's motivation to start a business arises from a. an innate love for the type of business that he or she starts. b. a desire to earn a profit. c. an altruistic desire to provide the world with a good product. d. All of the above could be correct.
d
An estate tax is an example of a(n) a. individual income tax. b. social insurance tax. c. corporate income tax. d. None of the above is correct.
d
Because the goods offered for sale in a competitive market are largely the same, a. there will be few sellers in the market. b there will be few buyers in the market. c. only a few buyers will have market power. d. sellers will have little reason to charge less than the going market price.
d
Both public goods and common resources are a. rival in consumption. b. nonrival in consumption. c. excludable. d. nonexcludable.
d
Competitive markets are characterized by a. a small number of buyers and sellers. b. unique products. c. the interdependence of firms. d. free entry and exit by firms.
d
Explicit costs a. do not require an outlay of money by the firm. b. enter into the accountant's measurement of a firm's profit. c. enter into the economist's measurement of a firm's profit. d. Both b and c are correct.
d
Figure 14-10 In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. Refer to Figure 14-10. If there are 500 identical firms in this market, what is the value of Q1? a. 10,000 b. 20,000 c 50,000 d. 150,000
d
Figure 14-9 In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. Refer to Figure 14-9. If at a market price of $1.75, 52,500 units of output are supplied to this market, how many identical firms are participating in this market? a. 75 b. 100 c. 250 d. 300
d
Figure 14-9 In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. Refer to Figure 14-9. If there are 300 identical firms in this market, what level of output will be supplied to the market when price is $2.00? a. 300 b. 6,000 c. 30,000 d. 60,000
d
Goods that are excludable include both a, club goods and public goods. b. public goods and common resources. c. common resources and private goods. d. private goods and club goods.
d
Goods that are not excludable are usually a. higher priced than excludable goods. b. higher priced than rival goods. c. in short supply. d. free of charge.
d
Goods that are rival in consumption and excludable would be considered a. club goods. b. common resources. c. public goods. d. private goods.
d
James earns income of $90,000 per year. His average tax rate is 40percent. James paid $5,500 in taxes on the first $40,000 he earned. What was the marginal tax rate on the rest of his income? a. 6.1 percent b. 44 percent c. 55 percent d. 61 percent
d
Negative externalities occur when one person's actions a. cause another person to lose money in a stock market transaction. b. cause his or her employer to lose business. c. reveal his or her preference for foreign-produced goods. d. adversely affect the well-being of a bystander who is not a party to the action.
d
Price discrimination a. is illegal in the United States and Europe. b. can occur in both perfectly competitive and monopoly markets. c. is illogical because it does not maximize profits. d. can maximize profits if the seller can prevent the resale of goods between customers.
d
Question 8 0 / 10 points Figure 14-10 In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. Refer to Figure 14-10. If there are 700 identical firms in this market, what is the value of Q2? a. 140,000 b. 210,000 c. 280,000 d. 420,000
d
Refer to Figure 15-3. Which of the following statements is correct? a. Panel B represents the typical demand curve for a perfectly competitive firm. b. Panel A represents the typical demand curve for a monopoly. c. Panel A represents the typical demand curve for a perfectly competitive industry. d. All of the above are correct.
d
Refer to Figure 15-7. A profit-maximizing monopolist would earn total revenues of a. $81. b. $144. c. $225. d. $240.
d
Refer to Figure 15-9. The monopolist's maximum profit a. is $1,600. b. is $2,000. c. is $2,500. d. cannot be determined from the diagram.
d
Billy's Bean Bag Emporium produced 300 bean bag chairs but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. The price for each of the 275 units sold was $95. Total profit for Billy's Bean Bag Emporium would be a. -$3,875. b. $26,125. c. $28,500. $d. 30,000.
a
Explicit costs a. require an outlay of money by the firm. b. include all of the firm's opportunity costs. c. include the value of the business owner's time. d. Both b and c are correct.
a
A firm that has little ability to influence market prices operates in a a. competitive market. b. strategic market. c. thin market. d. power market.
a
A negative externality a. is a cost to a bystander. b. is a cost to the buyer. c. is a cost to the seller. d. exists with all market transactions.
a
A negative externality a. is an adverse impact on a bystander. b. causes the product in a market to be under-produced. c. is an adverse impact on market participants. d. is present in markets where the good or service does not have any impact on bystanders.
a
A payroll tax is a tax on a. the wages that a firm pays its workers. b. earned and unearned income. c. specific goods like gasoline and cigarettes. d. corporate profits.
a
A positive externality occurs when a. Jack receives a benefit from John's consumption of a certain good. b. Jack receives personal benefits from his own consumption of a certain good. c. Jack's benefit exceeds John's benefit when they each consume the same good. d. Jack's receives a loss from John's consumption of a certain good.
a
A production function is a relationship between inputs and a. quantity of output. b. revenue. c. costs. d. profit.
a
A seller in a competitive market can a. sell all he wants at the going price, so he has little reason to charge less. b. influence the market price by adjusting his output. c. influence the profits earned by competing firms by adjusting his output. d. All of the above are correct.
a
Because the marginal tax rate rises as income rises, a. higher income families, in general, pay a larger percentage of their income in taxes. b. lower income families, in general, pay a larger percentage of their income in taxes. c. a disproportionately large share of the tax burden falls upon the poor. d. higher income families pay the same percentage of their income in taxes as lower-income families.
a
For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $11 and a marginal cost of $10. It follows that the a. production of the 100th unit of output increases the firm's profit by $1. b. production of the 100th unit of output increases the firm's average total cost by $1. c. firm's profit-maximizing level of output is less than 100 units. d. production of the 101st unit of output must increase the firm's profit by more than $1.
a
If Danielle sells 300 wrist bands for $0.50 each, her total revenues are a. $150. b. $299.50. c. $300. d. $600.
a
If Kevin's children run a lemonade stand for a day and sell 200 glasses of lemonade at $0.50 each, their total revenues are a. $100. b. $199.50. c. $200. d. $400.
a
Implicit costs a. do not require an outlay of money by the firm. b. do not enter into the economist's measurement of a firm's profit. c. are also known as variable costs. d. are not part of an economist's measurement of opportunity cost.
a
In a competitive market, the actions of any single buyer or seller will a. have a negligible impact on the market price. b. have little effect on market equilibrium quantity but will affect market equilibrium price. c, affect marginal revenue and average revenue but not price. d. adversely affect the profitability of more than one firm in the market.
a
Negative externalities lead markets to produce a. greater than efficient output levels and positive externalities lead markets to produce smaller than efficient output levels. b. smaller than efficient output levels and positive externalities lead markets to produce greater than efficient output levels. c. greater than efficient output levels and positive externalities lead markets to produce efficient output levels. d. efficient output levels and positive externalities lead markets to produce greater than efficient output levels.
a
Patents, copyrights, and trademarks a. are examples of government-created monopolies. b. allow their owners to reduce the costs of what they produce. c. generate more revenue for the government than they cost consumers in the form of higher prices. d. All of the above are correct.
a
Price discrimination requires the firm to a. separate customers according to their willingnesses to pay. b. differentiate between different units of its product. c. engage in arbitrage. d. use coupons.
a
Refer to Figure 15-3. Which panel could represent the demand curve facing a local cable television provider if that firm in a monopolist? Panel A Panel B Panel C Panel D
a
Refer to Figure 15-3. Which panel could represent the demand curve facing the soybean industry? a. Panel A b. Panel B c. Panel C d. Panel D
a
Refer to Figure 15-8. What is the monopoly price and quantity? a. price = A; quantity = X b. price = B; quantity = Y c. price = B; quantity = X d. price = C; quantity = X
a
Scenario 13-13 Christine is an artist who creates custom cookie jars. Her annual revenue from selling the cookie jars is $90,000. The annual explicit costs of the materials used to make the cookie jars are $54,000. Refer to Scenario 13-13. Christine used $5,000 from her personal savings account to buy pottery tools for her business. The savings account paid 1% annual interest. Christine could earn $6,000 per year as a tax preparer. What is the annual accounting profit of her cookie jar business? a. $36,000 b. $35,950 c. $30,000 d. $29,950
a
Some goods can be either common resources or public goods depending on a. whether the good is rival in consumption. b. whether the good is excludable. c. the marginal cost of the good. d. None of the above is correct.
a
State and local governments a. use a mix of taxes and fees to generate revenue. b. are required by federal mandate to levy income taxes. c. are required to tax property at a standard rate set by the federal government. d. must tax wages more heavily than interest and dividend income.
a
Table 12-3 Income Tax rate $0 to $40,000 20% Over $40,000 50% Refer to Table 12-3. What is the marginal tax rate for a person who makes $35,000? a. 20% b. 30% c. 40% d. 50%
a
The U.S. income tax a. discourages saving. b. encourages saving. c. has no effect on saving. d. will reduce the administrative burden of taxation.
a
The amount of money that a firm pays to buy inputs is called a. total cost. b. variable cost. c. marginal cost. d. fixed cost.
a
Which of the following are taxed? a. both corporate profits and dividends shareholders receive b. corporate profits but not dividends shareholders receive c. dividends shareholders receive but not corporate profits d. neither corporate profits nor dividends shareholders receive
a
Which of the following expressions is correct? a. accounting profit = economic profit + implicit costs b. accounting profit = total revenue - implicit costs c. economic profit = accounting profit + explicit costs d. economic profit = total revenue - implicit costs
a
Which of the following expressions is correct? a. accounting profit = total revenue - explicit costs b. economic profit = total revenue - implicit costs c. economic profit = total revenue - explicit costs d. Both a and b are correct.
a
Robin owns a horse stables and riding academy and gives riding lessons for children at "pony camp." Her business operates in a competitive industry. Robin gives riding lessons to 20 children per month. Her monthly total revenue is $4,000. The marginal cost of pony camp is $250 per child. In order to maximize profits, Robin should a. give riding lessons to more than 20 children per month. b. give riding lessons to fewer than 20 children per month. c. continue to give riding lessons to 20 children per month. d. We do not have enough information to answer the question.
b
Ryan sells 200 plastic ball point pens at $0.50 each. His total costs are $25. His profits are a. $25. b. $75. c. $100. d. $175.
b
Scenario 12-4 A taxpayer faces the following tax rates on her income: 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 a. 20 percent when her income rises from $40,000 to $40,001. b. 20 percent when her income rises from $30,000 to $30,001. c. 0 percent when her income rises from $30,000 to $30,001. d. 10 percent when her income rises from $40,000 to $40,001.
b
Scenario 13-13 Christine is an artist who creates custom cookie jars. Her annual revenue from selling the cookie jars is $90,000. The annual explicit costs of the materials used to make the cookie jars are $54,000. Refer to Scenario 13-13. Christine used $5,000 from her personal savings account to buy pottery tools for her business. The savings account paid 1% annual interest. What is Christine's annual opportunity cost of the financial capital that she invested in her business? a. $5 b. $50 c. $100 d. $200
b
Table 12-3 Income Tax rate $0 to $40,000 20% Over $40,000 50% Refer to Table 12-3. What is the average tax rate for a person who makes $60,000? a. 20% b. 30% c. 40% d. 50%
b
Table 12-4 Income Tax rate $0 to $40,000 25% $40,000 to $100,000 40% Over $100,000 60% Refer to Table 12-4. What is the average tax rate for a person who makes $130,000? a. 30% b. 40% c. 50% d. 60%
b
Table 12-5 Income Tax rate $0 to $50,000 20% $50,001 to $100,000 40% Over $100,000 60% Refer to Table 12-5. What is the average tax rate for a person who makes $120,000? a. 25% b. 35% c. 45% d. 60%
b
Table 12-5 Income Tax rate $0 to $50,000 20% $50,001 to $100,000 40% Over $100,000 60% Refer to Table 12-5. What is the marginal tax rate for a person who makes $37,000? a. 9.25% b. 20% c. 25% d. 40%
b
Table 13-1 Number of Workers Total Output Marginal Product 0 0 -- 1 30 2 45 3 60 4 50 5 40 Refer to Table 13-1. What is total output when 1 worker is hired? a. 10 b. 30 c. 45 d 75
b
Table 14-1 Quantity Price 0 $5 1 $5 2 $5 3 $5 4 $5 5 $5 6 $5 7 $5 8 $5 9 $5 Refer to Table 14-1. If the firm doubles its output from 3 to 6 units, total revenue will a. increase by less than $15. b. increase by exactly $15. c. increase by more than $15. d. Total revenue cannot be determined from the information provided.
b
Table 14-10 Suppose that a firm in a competitive market faces the following revenues and costs: Quantity Total Revenue Total Cost 0 $0 $3 1 $7 $5 2 $14 $9 3 $21 $15 4 $28 $23 5 $35 $33 6 $42 $45 7 $49 $59 Refer to Table 14-10. The marginal cost of producing the 4th unit is a. $7. b. $8. c. $10. d $23.
b
When a good is excludable, a. one person's use of the good diminishes another person's ability to use it. b. people can be prevented from using the good. c. no more than one person can use the good at the same time. d everyone will be excluded from using the good.
b
When negative externalities are present in a market a. private costs will be greater than social costs. b. social costs will be greater than private costs. c. only government regulation will solve the problem. d. the market will not be able to reach any equilibrium.
b
When negative externalities are present in a market, a. producers will be affected but consumers will not. b. producers will supply too much of the product. c. demand will be too high. d. the market will still maximize total benefits.
b
Which of the following is an example of a positive externality? a. A college student buys a new car when she graduates. b. The mayor of a small town plants flowers in the city park. c. Local high school teachers have pizza delivered every Friday for lunch. d. An avid fisherman buys new fishing gear for his next fishing trip.
b
Scenario 13-13 Christine is an artist who creates custom cookie jars. Her annual revenue from selling the cookie jars is $90,000. The annual explicit costs of the materials used to make the cookie jars are $54,000. Refer to Scenario 13-13. Christine used $5,000 from her personal savings account to buy pottery tools for her business. The savings account paid 1% annual interest. Christine could earn $6,000 per year as a tax preparer. What is the annual economic profit of her cookie jar business? a. $36,000 b. $35,950 c. $30,000 d.$29,950
d
Sue earns income of $80,000 per year. Her average tax rate is 30 percent. Sue paid 20 percent in taxes on the first $30,000 she earned. What was the marginal tax rate on the rest of her income? a. 20 percent b. 24 percent c. 30 percent d. 36 percent
d
Sue earns income of $80,000 per year. Her average tax rate is 50 percent. Sue paid $5,000 in taxes on the first $30,000 she earned. What was the marginal tax rate on the first $30,000 she earned, and what was the marginal tax rate on the remaining $50,000? a. 6.25 percent and 50.00 percent, respectively b. 10.00 percent and 70.00 percent, respectively c. 16.67 percent and 60.00 percent, respectively d. 16.67 percent and 70.00 percent, respectively
d
Table 12-3 Income Tax rate $0 to $40,000 20% Over $40,000 50% Refer to Table 12-3. What is the marginal tax rate for a person who makes $60,000? a. 20% b. 30% c. 40% d. 50%
d
Table 12-4 Income Tax rate $0 to $40,000 25% $40,000 to $100,000 40% Over $100,000 60% Refer to Table 12-4. What is the marginal tax rate for a person who makes $130,000? a. 30% b. 40% c. 50% d. 60%
d
Table 12-5 Income Tax rate $0 to $50,000 20% $50,001 to $100,000 40% Over $100,000 60% Refer to Table 12-5. What is the marginal tax rate for a person who makes $120,000? a. 25% b. 35% c. 45% d. 60%
d
Table 13-1 Number of Workers Total Output Marginal Product 0 0 -- 1 30 2 45 3 60 4 50 5 40 Refer to Table 13-1. What is total output when 3 workers are hired? a. 15 b. 60 c. 105 d. 135
d
Table 13-1 Number of Workers Total Output Marginal Product 0 0 -- 1 30 2 45 3 60 4 50 5 40 Refer to Table 13-1. What is total output when 5 workers are hired? a. -10 b. 90 c. 185 d. 225
d
Table 14-1 Quantity Price 0 $5 1 $5 2 $5 3 $5 4 $5 5 $5 6 $5 7 $5 8 $5 9 $5 Refer to Table 14-1. Over what range of output is marginal revenue declining? a. 1 to 6 units b. 3 to 7 units c. 7 to 9 units d. Marginal revenue is constant over the entire range of output.
d
Table 14-10 Suppose that a firm in a competitive market faces the following revenues and costs: Quantity Total Revenue Total Cost 0 $0 $3 1 $7 $5 2 $14 $9 3 $21 $15 4 $28 $23 5 $35 $33 6 $42 $45 7 $49 $59 Refer to Table 14-10. At which level of output in the table is average variable cost equal to $6? a. 2 units b 3 units c. 4 units d. 5 units
d
Table 14-6 The following table presents cost and revenue information for a firm operating in a competitive industry. COSTS REVENUES Quantity Produced Total Cost Marginal Cost Quantity Demanded Price Total Revenue Marginal Revenue 0 $100 -- 0 $120 -- 1 $150 1 $120 2 $202 2 $120 3 $257 3 $120 4 $317 4 $120 5 $385 5 $120 6 $465 6 $120 7 $562 7 $120 8 $682 8 $120 Refer to Table 14-6. What is the total revenue from selling 7 units? a. $120 b. $490 c. $562 d. $840
d
The fundamental source of monopoly power is a. many buyers and sellers. b. low fixed costs. c. rising average total costs. d. barriers to entry.
d
When an industry is a natural monopoly, a. it is characterized by constant returns to scale. b. it is characterized by diseconomies of scale. c a larger number of firms may lead to a lower average cost. d. a larger number of firms will lead to a higher average cost.
d
Which of the following is NOT an example of a negative externality? a. air pollution from a manufacturing plant. b. disrupted sleep from a neighbor's loud music. c. an illness caused by secondhand cigarette smoke. d. a decrease in your property value from neglecting your lawn and garden.
d
Which of the following is not a reason for the existence of a monopoly? a. sole ownership of a key resource b. patents c. copyrights d. diseconomies of scale
d
Which of the following would be considered a private good? a. a ferry boat ride to an island with open seating b. a public beach c. fish in the ocean d. a swimming suit
d
Which of the following would not be considered a private good? a. a pair of scissors b. a pair of shoes c. an SUV d. cable TV service
d
