Microeconomics Test 2

Wong and David live in a university dorm. Wong values playing loud music at a value of $50. David values peace and quiet at a value of $100. Which of the following statements is true about an efficient solution to this externality problem if Wong has the right to play loud music and there are no transaction costs? a. Wong will pay David $100 and Wong will continue to play loud music. b. David will pay Wong between $50 and $100, and Wong will continue to play loud music. c. Wong will pay David $50 and Bryce will stop playing loud music. d. David will pay Wong between $50 and $100, and Wong will stop playing loud music.

D. David will pay Wong between $50 and $100, and Wong will stop playing loud music

All of the following explain why spending on healthcare in the United States is rising except _______. a. services get relatively more expensive over time when compared to manufactured goods b. advances in medical technology creates treatments that are expensive c. as incomes rise, people spend a larger proportion of their incomes on medical services d. due to high birthrate, the U.S. population is getting younger and young people are risk loving and accident prone

D. Due to high birthrate, the U.S. population is getting younger and young people are risk loving and accident prone

Eric has five table tennis paddles and Alicia has none. A paddle costs $50 to produce. If Eric values an additional paddle at $100 and Alicia values a paddle at $40, then to maximize ________. a. efficiency, Alicia should receive the additional paddle b. equality, Eric should receive the additional paddle c. consumer surplus, both should receive a paddle d. efficiency, Eric should receive the additional paddle

D. Efficiency, Eric should receive the additional paddle

A negative externality (that has not been internalized) causes the _______. a. optimal quantity to exceed the equilibrium quantity b. equilibrium quantity to equal the optimal quantity c. equilibrium quantity to be either above or below the optimal quantity d. equilibrium quantity to exceed the optimal quantity

D. Equilibrium quantity to exceed the optimal quantity

A progressive tax system is one where _______. a. marginal tax rates are low b. marginal tax rates are high c. higher income taxpayers pay more taxes than do lower income taxpayers d. higher income taxpayers pay a greater percentage of their income in taxes than do lower income taxpayers

D. Higher income taxpayers pay a greater percentage of their income in taxes than do lower income taxpayers

The proportion of GDP spent on healthcare in the United States _______. a. is significantly less than other developed nations b. is similar to other developed nations c. was slightly less than other developed nations but the gap is closing d. is significantly more than other developed nations

D. Is significantly more than other developed nations

When doctors order excessive tests and expensive treatments because they know that an insurance company will pay the bill, we have seen a demonstration of _______. a. patent protection b. adverse selection c. risk aversion d. moral hazard

D. Moral Hazard

When an individual buys a car in a congested urban area, it generates a(n)_______. a. efficient market outcome b. technology spillover c. positive externality d. negative externality

D. Negative externality

A club good is _______. a. both rival in consumption and excludable b. neither rival in consumption nor excludable c. rival in consumption but not excludable d. not rival in consumption but excludable

D. Not rival in consumption but excludable

Coffee clearly enhances many people's lives. Therefore, we should consume coffee until ________. a. everyone has as much as they would like b. we must cut back on the consumption of other goods c. buyers receive no benefit from another cup of coffee d. the benefit buyers place on coffee is equal to the cost of producing it

D. The benefit buyers place on coffee is equal to the cost of producing it

Ida values a pair of blue jeans at $80. If the price is $75, Ida buys the jeans and generates consumer surplus of $5. Suppose a tax is placed on blue jeans that causes the price of blue jeans to rise to $85. Now Ida fails to buy a pair of jeans. This example has demonstrated _______. a. the administrative burden of a tax b. horizontal equity c. the benefits principle d. the deadweight loss from a tax e. the ability-to-pay principle

D. The deadweight loss from a tax

The seller's cost of production is ________. a. the seller's consumer surplus b. the seller's producer surplus c. the maximum amount the seller is willing to accept for a good d. the minimum amount the seller is willing to accept for a good e. none of the answer choices

D. The minimum amount the seller is willing to accept for a good

The most efficient pollution control system would ensure that _______. a. the regulators decide how much each polluter should reduce its pollution b. no pollution of the environment is tolerated c. each polluter reduce its pollution an equal amount d. the polluters with the lowest cost of reducing pollution reduce their pollution the greatest amount

D. The polluters with the lowest cost of reducing pollution reduce their pollution with the greatest amount of

Wong and David live in a university dorm. Wong values playing loud music at a value of $50. David values peace and quiet at a value of $100. Which of the following statements is true? a. It is efficient for Wong to stop playing loud music only if Wong has the property right to play loud music. b. It is efficient for Wong to continue to play loud music. c. It is efficient for Wong to stop playing loud music only if David has the property right to peace and quiet. d. It is efficient for Wong to stop playing loud music regardless of who has the property right to the level of sound.

d. It is efficient for Wong to stop playing loud music regardless of who has the property right to the level of sound

If a buyers willingness to pay for a new Toyota is $40,000 and they are able to actually buy it for $38,000, their consumer surplus is...

$2,000

A negative externality affects market efficiency in a manner similar to a(n) _______. a. common resource b. public good c. private good d. excludable good

A. Common resource

Tradable pollution permits _______. a. set the quantity of pollution b. reduce the incentive for technological innovations to further reduce pollution c. set the price of pollution d. determine the demand for pollution rights

A. Set the quantity of pollution

Which one of the following statements regarding the taxes of state and local governments is true? a. The greatest source of revenue to state and local governments is property taxes. b. Corporate income taxes are a greater source of tax revenue to state and local governments than personal income taxes. c. State and local governments collect more tax revenue than the federal government. d. The greatest source of tax revenue to state and local governments is sales taxes.

A. The greatest source of revenue to state and local governments is property taxes

At present, out-of-pocket spending on healthcare in the United States is about _______. a. 55 percent of total healthcare spending b. 13 percent of total healthcare spending c. 5 percent of total healthcare spending d. 40 percent of total healthcare spending

B. 13 percent of total healthcare spending

U.S. tax laws promote generous employer-provided health insurance. This fact tends to increase _______. a. positive externalities b. moral hazard c. adverse selection d. out-of-pocket spending on healthcare

B. Moral Hazard

In the United States, the tax system is _______. a. regressive b. progressive c. proportional d. lump sum

B. Progressive

When the government funds medical research, it generates _______. a. moral hazard b. adverse selection c. a positive externality d. additional market imperfections

C. A positive externality

The people that support the largest role for government in the healthcare system tend to argue for _______. a. a public option for medical insurance b. an increase in out-of-pocket spending for healthcare to reduce the price of medical procedures c. a single-payer system such as Medicare for all d. free market competition in healthcare

C. A single-payer system such as Medicare for all

The Tragedy of the Commons is a parable that illustrates why _______. a. private goods are under-consumed b. club goods are overconsumed c. common resources are over-consumed d. public goods are underproduced

C. Common resources are over-consumed

An efficient tax _______. a. raises revenue at the smallest possible cost to taxpayers b. minimizes the deadweight loss from the tax c. minimizes the administrative burden from the tax d. does all of the answer choices

D. Does all of the answer choices

A tax for which high-income taxpayers pay a smaller fraction of their income than do low-income taxpayers is known as a(n) _______. a. progressive tax b. proportional tax c. equitable tax d. regressive tax

D. Regressive tax

Suppose that the price of a concert ticket is $300. Manu values the ticket at $400. It costs $200 for the seller to provide the ticket. What is the value of total surplus if Manu buys the concert ticket?

$200

Consumer surplus is the area... A. Below the demand curve and above the price B. Above the demand curve and below the price C. Below the supply curve and above the price D. Below the demand curve and above the supply curve E. Above the supply curve and below the price

A. Below the demand curve and above the price

A private good is _______. a. both rival in consumption and excludable b. neither rival in consumption nor excludable c. rival in consumption but not excludable d. not rival in consumption but excludable

A. Both rival in consumption and excludable

A tax on gasoline is likely to _______. a. cause a greater deadweight loss in the long run when compared to the short run b. cause a greater deadweight loss in the short run when compared to the long run c. generate a deadweight loss that is unaffected by the time period over which it is measured d. none of the answer choices are correct

A. Cause a greater deadweight loss in the long run when compared to the short run

Adam Smith's "invisible hand" concept suggests that a competitive market outcome ________. a. maximizes total surplus b. generates equality among the members of society c. maximizes total surplus and generates equality among the members of society d. minimizes total surplus

A. Maximizes total surplus

A positive externality (that has not been internalized) causes the _______. a. optimal quantity to exceed the equilibrium quantity b. equilibrium quantity to exceed the optimal quantity c. equilibrium quantity to equal the optimal quantity d. equilibrium quantity to be either above or below the optimal quantity

A. Optimal quantity to exceed the equilibrium quantity

The people that politically support private insurers and private healthcare providers make all of the following arguments except _______. a. private competitive systems limit individual freedom, but the benefits of private healthcare outweigh the costs b. private competitive systems are less likely to ration medical care c. evidence shows that centralized systems generate long waiting lines for medical procedures d. centralized systems stifle innovation

A. Private competitive systems limit individual freedom, but the benefits of private healthcare outweigh the costs

Clothing is a _______. a. private good b. public good c. common resource d. club good

A. Private good

A positive externality affects market efficiency in a manner similar to a _______. a. public good b. rival good c. common resource d. private good

A. Public good

When governments employ cost-benefit analysis to help them decide whether to provide a public good, measuring benefits is difficult because _______. a. respondents to questionnaires have little incentive to tell the truth b. there are no benefits to the public because a public good is not excludable c. one can never place a value on human life or the environment d. the benefits are infinite because a public good is not rival in consumption and an infinite amount of people can consume it at the same time

A. Respondents to questionnaires have little incentive to tell the truth

Suppose there are three identical mugs available to be purchased. Buyer 1 is willing to pay $30 for one, buyer 2 is willing to pay $25 for one, and buyer 3 is willing to pay $20 for one. If the price is $25, how many mugs will be sold and what is the value of consumer surplus in this market? a. Two mugs will be sold, and consumer surplus is $5. b. One mug will be sold, and consumer surplus is $5. c. Three mugs will be sold, and consumer surplus is $80. d. Three mugs will be sold, and consumer surplus is $0. e. One mug will be sold, and consumer surplus is $30.

A. Two mugs will be sold, and consumer surplus is $5

Suppose people with hidden health problems drive the price of health insurance higher. As a result, healthy people forgo buying health insurance causing the insured pool to get less and less healthy. This causes premiums to rise further until the private health insurance market disappears. This scenario is referred to as _______. a. moral hazard b. a death spiral c. risk aversion d. premium explosion

B. A death spiral

A positive externality generates _______. a. a social cost curve that is above the supply curve (private cost curve) for a good b. a social value curve that is above the demand curve (private value curve) for a good c. a social value curve that is below the demand curve (private value curve) for a good d. none of the answer choices

B. A social value curve that is above the demand curve (private value curve) for a good

Which of the following would likely cause the greatest deadweight loss? a. A tax on salt b. A tax on jewelry c. A tax on cigarettes d. A tax on gasoline

B. A tax on jewelry

Producer surplus is the area ________. a. below the demand curve and above the price b. above the supply curve and below the price c. below the supply curve and above the price d. below the demand curve and above the supply curve e. above the demand curve and below the price

B. Above the supply curve and below the price

If a market generates a side effect or externality, then free market solutions ________. a. generate equality b. are inefficient c. maximize producer surplus d. are efficient

B. Are inefficient

When wealthy alumni provide charitable contributions to their alma mater to reduce the tuition payments of current students, it is an example of a(n) _______. a. corrective tax b. attempt to internalize a positive externality c. command-and-control policy d. attempt to internalize a negative externality

B. Attempt to internalize a positive externality

Technological progress does not increase productivity in the service sector as much as it does in other economic sectors. As a result, services such as healthcare tend to become relatively more expensive over time. This result is known as _______. a. the technology cost pattern b. Baumol's cost disease c. service sector hazard d. the healthcare trap

B. Baumol's cost disease

If a person can be prevented from using a good, the good is said to be _______. a. rival in consumption b. excludable c. a common resource d. a public good

B. Excludable

When compared to 60 years ago, spending on healthcare in the United States _______. a. is difficult to measure due to medical privacy rules known as HIPAA (Health Insurance Portability and Accountability Act) b. has become a larger percent of GDP c. is approximately the same percent of GDP d. has become a smaller percent of GDP

B. Has become a larger percent of GDP

The appropriate tax rate to employ to gauge how much the tax system distorts incentives and decision making is the _______. a. average tax rate b. marginal tax rate c. horizontal tax rate d. proportional tax rate

B. Marginal tax rate

The rules that limit the use of healthcare services by establishing the treatments the insurer will pay for and the prices it will pay reduce _______. a. risk aversion b. moral hazard c. adverse selection d. market efficiency

B. Moral Hazard

A public good is _______. a. both rival in consumption and excludable b. neither rival in consumption nor excludable c. rival in consumption but not excludable d. not rival in consumption but excludable

B. Neither rival in consumption nor excludable

Which of the following generates a positive externality in the healthcare market? a. People go to work when they feel ill in order to maintain production. b. People get vaccinated because the government requires it. c. People buy health insurance after they are already sick. d. People fail to exercise because they have health insurance.

B. People get vaccinated because the government requires it

The ability-to-pay principle of taxation suggests that if a tax system is to be vertically equitable, it should be _______. a. lump-sum b. progressive c. proportional d. regressive e. efficient

B. Progressive

A free rider is a person who _______. a. produces a good but fails to receive payment for the good b. receives the benefit of a good but avoids paying for it c. fails to produce goods but is allowed to consume goods d. pays for a good but fails to receive any benefit from the good

B. Receives the benefit of a good but avoids paying for it

If one person's consumption of a good diminishes other people's use of the good, the good is said to be _______. a. excludable b. rival in consumption c. a club good d. a common resource

B. Rival in consumption

To internalize a negative externality, an appropriate public policy response would be to _______. a. subsidize the good b. tax the good c. ban the production of all goods creating negative externalities d. have the government take over the production of the good causing the externality

B. Tax the good

When markets fail to allocate resources efficiently, the ultimate source of the problem is usually _______. a. that prices are not low enough so firms overproduce b. that property rights have not been well established c. that prices are not high enough so people overconsume d. government regulation

B. That property rights have not been well established

The marginal tax rate is _______. a. total taxes paid divided by total income b. the amount by which taxes increase from an additional dollar of income c. total income divided by total taxes paid d. the taxes paid by the marginal worker

B. The amount by which taxes increase from an additional dollar of income

If a benevolent social planner chooses to produce less than the equilibrium quantity of a good, then ________. a. consumer surplus is maximized b. the value placed on the last unit of production by buyers exceeds the cost of production c. producer surplus is maximized d. the cost of production on the last unit produced exceeds the value placed on it by buyers e. total surplus is maximized

B. The value placed on the last unit of production by buyers exceeds the cost of production

According to the Coase theorem, private parties can solve the problem of externalities if _______. a. each affected party has equal power in the negotiations b. there are no transaction costs c. the party affected by the externality has the initial property right to be left alone d. the government requires them to negotiate with each other e. there are a large number of affected parties

B. There are no transaction costs

A corrective tax on pollution _______. a. determines the demand for pollution rights b. sets the price of pollution c. reduces the incentive for technological innovations to further reduce pollution d. sets the quantity of pollution

B. sets the price of pollution

The average tax rate for a taxpayer earning $40,000 is what after paying 4,000 into taxes... A. 0 percent B. 5 percent C. 10 percent D. 20 percent E. None of these choices are correct

C. 10 percent

In the United States, the top 20 percent of the income distribution pays approximately _______. a. 1 percent of their income in federal taxes b. 20 percent of their income in federal taxes c. 25 percent of their income in federal taxes d. 30 percent of their income in federal taxes

C. 25 percent of their income in federal taxes

Over the last 120 years, life expectancy in the United States has increased by a little more than _______. a. 20 years b. 10 years c. 30 years d. 40 years

C. 30 years

Which of the following is not considered a transaction cost incurred by parties in the process of contracting to eliminate a pollution externality? a. Costs incurred due to lawyers' fees b. Costs incurred due to a large number of parties affected by the externality c. Costs incurred to reduce the pollution d. Costs incurred to enforce the agreement

C. Costs incurred to reduce the pollution

An increase in the price of a good along a stationary demand curve... A. Improves the material welfare of the buyers B. Increases consumer surplus C. Decreases consumer surplus D. Improves market efficiency

C. Decreases consumer surplus

An increase in the price of a good along a stationary supply curve ________. a. improves market equity b. does all of the answer choices c. increases producer surplus d. decreases producer surplus

C. Increases producer surplus

Which of the following would help prevent moral hazard in the health insurance market? a. Insurance companies charge higher health insurance premiums to skydivers. b. The government pays all healthcare bills in a "single payer" system. c. Insurance companies require co-pays for each healthcare visit. d. Insurance companies require an applicant for health insurance to take a physical

C. Insurance companies require an applicant for health insurance to take a physical

Suppose each of 20 neighbors on a street values a streetlight at $3,000. The cost of the streetlight is $40,000. Which of the following statements is true? a. It is not efficient to have a streetlight. b. It is efficient for each neighbor to pay a $3,000 contribution to installing a streetlight. c. It is efficient for the government to tax the residents $2,000 each and install a streetlight. d. None of the answer choices are correct

C. It is efficient for the government to tax the residents $2,000 each and install a streetlight

Which of the following is an example of a public good? a. Oranges on a tree in a public park b. Fish in the ocean c. National defense d. Hamburgers at a barbecue

C. National defense

Which of the following lists the sources of tax revenue to the federal government from the largest source to the smallest source? a. Personal income taxes, corporate income taxes, social insurance taxes b. Corporate income taxes, personal income taxes, social insurance taxes c. Personal income taxes, social insurance taxes, corporate income taxes d. Social insurance taxes, personal income taxes, corporate income taxes e. None of the answer choices are correct.

C. Personal income taxes, social insurance taxes, corporate income taxes

Most people prefer to pay $1,000 per year with certainty as opposed to having a 2 percent chance of paying for a $50,000 medical procedure. This example demonstrates _______. a. moral hazard in the health insurance market b. adverse selection in the health insurance market c. risk aversion in the health insurance market d. the negative externality in the health insurance market

C. Risk aversion in the health insurance market

A common resource is _______. a. both rival in consumption and excludable b. neither rival in consumption nor excludable c. rival in consumption but not excludable d. not rival in consumption but excludable

C. Rival in consumption but not excludable

The government provides health insurance for all of the following except _______. a. former military personnel b. people with low incomes c. single women with children d. older Americans

C. Single women with children

To internalize a positive externality, an appropriate public policy response would be to _______. a. have the government produce the good until the value of an additional unit is zero b. tax the good c. subsidize the good d. ban the good creating the externality

C. Subsidize the good

A buyer's willingness to pay is... A. That buyers consumer surplus B. That buyers producer surplus C. That buyers maximum amount they are willing to pay for a good D. That buyers minimum amount they are willing to pay for a good E. None of the answer choices

C. That buyers maximum amount they are willing to pay for a good

Public goods are difficult for a private market to provide due to _______. a. the rivalness problem b. the public goods problem c. the free-rider problem d. the Tragedy of the Commons

C. The free-rider problem

Which of the following statements about the U.S. healthcare system is true? a. The United State spends about 30 percent of GDP on healthcare. b. U.S. healthcare consumers pay less for pharmaceutical drugs than foreign consumers. c. The income elasticity of the demand for healthcare in the United States is larger than one. d. U.S. healthcare costs are declining due to advances in medical technology.

C. The income elasticity of the demand for healthcare in the United States is larger than one

An externality is _______. a. the benefit that accrues to the buyer in a market b. the cost that accrues to the seller in a market c. the uncompensated impact of one person's actions on the well-being of a bystander d. the compensation paid to a firm's external consultants e. none of the answer choices

C. The uncompensated impact of one persons actions on the wellbeing of a bystander

The government engages in an industrial policy _______. a. by allocating tradable technology permits to high technology industry b. to help stimulate private solutions to the technology externality c. to internalize the positive externality associated with technology-enhancing industries d. to internalize the negative externality associated with industrial pollution

C. To internalize the positive externality associated with technology-enhancing industries

The average tax rate is _______. a. total income divided by total taxes paid b. the amount by which taxes increase from an additional dollar of income c. total taxes paid divided by total income d. the taxes paid by the marginal worker

C. Total taxes paid divided by total income

Suppose that requiring motorcycle riders to wear helmets reduces the probability of a motorcycle fatality from 0.3 percent to 0.2 percent over the lifetime of a motorcycle rider and that the cost of a lifetime supply of helmets is $500. It is efficient for the government to require riders to wear helmets if human life is valued at _______. a. $500 or more b. $150 or more c. $50,000 or more d. $500,000 or more e. $100 or more

D. $500,000 or more

Which of the following taxes is the most efficient tax? a. A consumption tax b. A proportional income tax c. A progressive income tax d. A lump-sum tax

D. A lump-sum tax

If a market is efficient, then ________. a. the market allocates output to the buyers who value it the most b. the market allocates buyers to the sellers who can produce the good at least cost c. the quantity produced in the market maximizes the sum of consumer and producer surplus d. all of the answer choices are correct e. none of the answer choices are correct

D. All of the answer choices are correct

Which of the following are potential solutions to the problem of noise pollution near an airport? a. Auction off noise permits to the airlines. b. Grant rights to peace and quiet to residents near the airport so that airlines must purchase the right to make noise. c. Regulate the amount of noise that an aircraft can make. d. All of the answer choices are correct.

D. All of the answer choices are correct

Because consumers of healthcare have difficulty judging the quality of medical care, to improve the efficiency of the healthcare market _______. a. the FDA ensures that pharmaceutical drugs are safe and effective b. the government requires doctors to be licensed c. medical schools are accredited by the medical profession d. all the answer choices are correct

D. All the answer choices are correct

In general, if a benevolent social planner wanted to maximize the total benefits received by buyers and sellers in a market, the planner should ________. a. choose any price the planner wants because the losses to the sellers (buyers) from any change in price are exactly offset by the gains to the buyers (sellers) b. choose a price above the market equilibrium price c. choose a price below the market equilibrium price d. allow the market to seek equilibrium on its own

D. Allow the market to seek equilibrium on its own

Some large cities charge drivers more to use a bridge during busy drive times. This "surge pricing" is an example of a(n) _______. a. attempt to internalize a positive externality b. application of the Coase theorem c. tradable pollution permit d. attempt to internalize a negative externality

D. Attempts to internalize a negative externality

Total surplus is the area ________. a. above the demand curve and below the price b. below the demand curve and above the price c. above the supply curve and below the price d. below the demand curve and above the supply curve e. below the supply curve and above the price

D. Below the demand curve and above the supply curve

Which of the following is true regarding tradable pollution permits and corrective taxes? a. Corrective taxes are more likely to reduce pollution to a targeted amount than tradable pollution permits. b. Tradable pollution permits efficiently reduce pollution only if they are initially distributed to the firms that can reduce pollution at the lowest cost. c. To set the quantity of pollution with tradable pollution permits, the regulator must know everything about the demand for pollution rights. d. Corrective taxes and tradable pollution permits create an efficient market for pollution. e. All of the answer choices are correct.

D. Corrective taxes and tradable pollution permits create an effective market for pollution

The appropriate tax rate to employ to judge the vertical equity of a tax system is the _______. a. average tax rate b. horizontal tax rate c. proportional tax rate d. marginal tax rate

A. Average tax rate

In 2020, the highest marginal income tax rate in the United States was _______. a. 37 percent b. 35 percent c. 32 percent d. 24 percent e. 15 percent

A. 37 percent of

A person who regularly listens to public radio but fails to contribute to public radio's fund-raising drives is known as _______. a. a common rider b. a costly rider c. excess baggage d. an unwelcome rider e. a free rider

A. A free rider

Which of the following is an example of a common resource? a. A national park b. Tornado siren c. Iron ore d. A fireworks display

A. A national park

A negative externality generates _______. a. a social cost curve that is above the supply curve (private cost curve) for a good b. a social cost curve that is below the supply curve (private cost curve) for a good c. a social value curve that is above the demand curve (private value curve) for a good d. none of the answer choices

A. A social cost curve that is above the supply curve (private cost curve) for a good

Karla has recently received a diagnosis of a disease that will require expensive medical treatment. As a result, she immediately buys health insurance. This is a demonstration of _______. a. adverse selection b. a positive externality c. moral hazard d. risk and uncertainty

A. Adverse selection

If a producer has market power (can influence the price of the product in the market) then free market solutions ________. a. are inefficient b. maximize consumer surplus c. generate equality d. are efficient

A. Are inefficient

Suppose an industry generates a negative externality such as carbon emissions, and the possible methods to internalize the externality are command-and-control policies, corrective taxes, and tradable pollution permits. If economists were to rank these methods for internalizing a negative externality based on efficiency, ease of implementation, and the incentive for the industry to further reduce carbon emissions in the future, they would likely rank them in the following order (from most favored to least favored): _______. a. they would all rank equally high because the same result can be obtained from any one of the policies b. command-and-control policies, tradable pollution permits, corrective taxes c. corrective taxes, command-and-control policies, tradable pollution permits d. tradable pollution permits, corrective taxes, command-and-control policies e. tradable pollution permits, command-and-control p

D. Tradable pollution permits, corrective taxes, command-and-control policies

In 2020, the average American paid federal taxes of about _______. a. $7,000 b. $8,000 c. $9,000 d. $10,000 e. $11,000

E. $11,000

Which of the following taxes can be supported by the benefits principle of taxation? a. Gasoline taxes used to pay for roads b. Progressive income taxes used to pay for national defense c. Property taxes used to pay for police and the court system d. Progressive income taxes used to pay for antipoverty programs e. All of the choices can be supported by the benefits principle of taxation.

E. All of the choices can be supported by the benefits principle of taxation

If buyers are rational and there is no market failure, ________. a. competitive market solutions are efficient, generate equality, and maximize total surplus b. competitive market solutions are efficient c. competitive market solutions maximize total surplus d. competitive market solutions generate equality e. competitive market solutions are efficient and maximize total surplus

E. Competitive market solutions are efficient and maximize total surplus

If a benevolent social planner chooses to produce more than the equilibrium quantity of a good, then ________. a. consumer surplus is maximized b. total surplus is maximized c. the value placed on the last unit of production by buyers exceeds the cost of production d. producer surplus is maximized e. the cost of production on the last unit produced exceeds the value placed on it by buyers

E. The cost of production on the last unit produced exceeds the value placed on it by buyers