Chp 10 Microeconomics quiz

An upstream tax: A) is placed on raw materials close to the point of extraction. B) is designed not to increase prices. C) is designed to primarily impact high-income households. D) is designed to impact consumers and producers equally. E) is placed on goods at services at the point of transport to markets.

a

A Pigovian tax... A) is a proportional wealth tax. B) internalizes the negative externality from producing a good. C) allows firms to externalize some of the costs of production. D) is a progressive income tax. E) is always greater than the social marginal cost of producing a good.

b

The ability of forests to reduce soil erosion is an example of what type of economic value? A) Contingent value B) Ecosystem service value C) Nonuse value D) Revealed value E) Intrinsic value

b

What is the approximate current Gini coefficient for household income distribution in the United States? A) 0.37 B) 0.48 C) 0.59 D) 0.72 E) 0.83

b

1-D+E+F+G 2-A+B+C 3-D+E 4-C+D+G 5-D+E+F+G+H

3

1-D+E 2-C+D+G 3-A+B+C 4-D+E+F+G 5-D+E+F+G+H

5

Environmental taxes tend to be regressive because A) they impose a greater tax burden on the rich than the poor. B) they internalize externalities. C) the poor spend a higher percentage of their income on goods with negative externalities D) they decrease social welfare. E) only income taxes can be progressive.

c

From the perspective of economic efficiency, an unregulated market outcome in the presence of a negative externality results in A) a price and quantity that are both too high. B) a price and quantity that are both too low. C) a price that is too low and a quantity that is too high. D) the correct price and quantity. E) a price that is too high and a quantity that is too low.

c

If a Lorenz curve is a 45-degree line sloping upwards, this means: A) that the society directs all its efforts toward the least fortunate. B) that one household receives all the income in the society. C) that all households in the society have the same income. D) that the society's distribution of income is highly unequal. E) that the society's Gini coefficient is 0.

c

If children born in low-income households and high-income households have similar chances of earning high incomes in the future, then we can conclude that ... A)income inequality will not change over time. B)income inequality is high. C)economic mobility is high. D)economic mobility is low. E)wealth equality is high.

c

Which of the following is not a policy that could help reduce economic inequality at least somewhat? A) More progressive taxation B) A higher minimum wage C) Financial deregulation D) Laws that give labor unions more power E) Expanded access to higher education

c

Which of the following is not a potential cause of increased economic inequality in the United States in recent decades? A) A declining wage share B) Increased international trade C) Economic growth D) Technological change E) Lower unionization rates

c

Which one of the following statements is false? A) Government intervention in the presence of externalities can increase social efficiency. B) A Pigovian tax will result in a lower equilibrium quantity. C) A pollution level of zero results in the highest social welfare in the presence of externalities. D) A subsidy can create an economically efficient outcome in the presence of a positive externality. E) A Pigovian tax can internalize a negative externality.

c

A Lorenz curve measures ... A) unrealized capital gains. B) national income over time. C)the benefits of exchange. D)the distribution of income. E) transfer payments.

d

A positive externality is incorporated into the supply-and-demand model as A) a downward shift of the supply curve. B) an upward shift of the supply curve. C) a downward shift of the demand curve. D) an upward shift of the demand curve. E) None of the above

d

In the United States, the Gini coefficient for income is about _____, and the Gini coefficient for wealth is about ______. A) 0.2, 0.5 B) 0.3, 0.6 C) 0.4, 0.7 D) 0.5, 0.8 E) 0.6, 0.9

d

Payments for the use of a capital asset are known as A)dividends. B)luxury payments. C)balanced payments. D)rents. E)capital gains.

d

The main benefit of upstream taxes is that A) they are revenue-neutral. B) they do not raise prices of final goods. C) they mostly burden producers, not consumers. D) they reduce administration costs. E) they are more progressive than taxes on final goods.

d

The richest fifth (20%) of American households receive approximately what percentage of U.S. household income? A) 8% B) 23% C) 41% D) 52% E) 66%

d

Which of the following statements most accurately describes the history of income inequality in the United States? A) Inequality has continually increased since the 1920s. B) Inequality has continually decreased since the 1920s. C) Inequality tended to increase until the 1950s, decrease until the 1980s, and then increase. D) Inequality tended to decrease after the Great Depression, and increase since the late 1960s. E) Inequality tended to increase after the Great Depression, and remain steady since the late 1960s.

d

Which one of the following could be a negative externality associated with the production and sale of bananas? A) The cost of acquiring land for growing bananas B) The cost of harvesting bananas C) The cost of planting banana trees D) The cost of filtering pesticides from runoff near banana farms E) The cost of transporting bananas

d

Which one of the following statements about the Gini coefficient is false? A) It ranges from zero to one. B) The closer the Gini coefficient to zero, the lower the level of inequality. C) The closer the Gini coefficient to one, the greater the level of inequality. D) A Gini coefficient of 0.5 means that the bottom 50% of the population earn 25% of total income. E) A Gini coefficient equal to one depicts the case of absolute inequality.

d

A Pigovian subsidy A) increases production costs. B) internalizes the negative externality from producing a good. C) raises the cost of a good to consumers. D) raises revenues that can be used for public purposes. E) increases the equilibrium quantity of a good.

e

A negative externality is incorporated into the supply-and-demand model as . . . A) None of the above B) a downward shift of the demand curve. C) an upward shift of the supply curve. D) a downward shift of the supply curve. E) an upward shift of the demand curve.

e

A negative externality is incorporated into the supply-and-demand model as . . . A) an upward shift of the supply curve. B) None of the above C) a downward shift of the supply curve. D) a downward shift of the demand curve. E) an upward shift of the demand curve.

e

Advent of rapid technological change is cited in the textbook as one of the causes of increased income inequality in the United States. Which of the following are mechanisms by which rapid technological change increases income inequality? A) It increases the income of skilled workers B) It increases the access to education C) It produces gadgets that are out of reach of low income families D) It leads to machines replacing low skilled workers E) a. and d.

e

Payments for the use of a capital asset are known as A)luxury payments. B)balanced payments. C)capital gains. D)dividends. E)rents.

e

Which of the following are some of the causes of increasing inequality in the United States? A) Changing demographics B) A declining wage share of all income C) Skill-biased technological change D) Weakening of labor unions E) All of the above

e

Which one of the following is not a potential reason for people's willingness-to-pay for environmental goods? A) Ecosystem services B) Nonuse benefits C) Recreation D) Profit-making enterprises E) Taxes or subsidies

e

Which one of the following is not an example of a negative externality? A) Litter B) Loud noise C) Second-hand smoke D) Water pollution E) Pollination by bees

e

Which one of the following statements is true? A) The countries with the lowest Gini coefficients have Gini coefficients around 0.60. B) The countries with the highest Gini coefficients have Gini coefficients around 0.95. C) The United States has the highest Gini coefficient of any country. D) Latin American countries tend to have the lowest Gini coefficients. E) Inequality can be low in both high-income and low-income countries.

e