econ

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If the market price is $3.00, what is the maximum number of burritos that Arnold will buy?

0

The key to solving problems associated with smoking in restaurants is to

Assign property rights to restaurant owners

which of the following statements about rent seeking is false?

Because rent seeking redistributes society's resources, anyone engaging in such behavior is violating the law.

In the figure above, suppose that the government imposes a tax of $4 per pizza. Then, the

Both answers A and B are correct.

The price ceiling depicted in the above figure results in

Both answers A and B are correct.

Which of the following statements is true?

Consumer surplus measures the net benefit from participating in a market.

Which of the following is FALSE about public-sector decision making?

Decisions involve no opportunity cost.

The central question In trying to determine whether to involve the government in an economic issue is

Determining whether or not the government can be relied on to make things better

The social problem of smoking in restaurants is caused because smokers want to pollute the air, causing harm to people around them

False

Restaurant owners have an incentive to

Fully account for the value impact of restaurant smoking on nonsmokers. Fully account for the value of restaurant smoking to smokers. Take into account how smoking shifts the overall demand curve for restaurant meals. All of the above.

A key advantage of assigning property rights to owners of restaurants is that

Smokers and nonsmokers are likely to be able to eat meals the way they like.

tax incidence

The actual division of the burden of a tax between buyers and sellers in a market is called

Willingness to pay measures

The maximum price a buyer is willing to pay for a good

a tariff is

a tax on imported goods.

Which of the following is true regarding tax incidence?

i only

a tarriff

makes domestic consumers worse off

Producer surplus is equal to

the area above the supply curve below the good's price

Overfishing leading to a rapid depletion of the stock of fish is an example of ____

the tragedy of the commons

price ceiling refers to ________.

the upper limit on the price of a good

What is the incremental cost of increasing the quantity of pollution reduction from Q B to Q E units?

the value of the area Q B BEQ E

Taxes may cause deadweight losses because

they lower the surplus in the market.

. The price buyers pay after the tax is

27

A rent ceiling set below the equilibrium rent

creates a situation in which the quantity demanded of housing is greater than quantity supplied.

____ refers to the reduction in economic surplus resulting from not being in competitive equilibrium.

deadweight loss

In a progressive tax system, ________.

he marginal tax rate exceeds the average tax rate

To affect the market outcome, a price ceiling

must be set below equilibrium, price

If a seller charges of are the exact price buyers willing to pay the buyer receives:

no consumer surplus from that unit of the good

If you pay $2,000 in taxes on an income of $20,000, and a tax of $3,000 on an income of $30,000, then over this range of income the tax is

proportional

A possible reason to impose a protectionist policy such as a tariff is to

protect domestic workers from foreign competition

In a housing market with no rent ceilings, the equilibrium rent is that for which the quantity of apartments demanded

= the quantity demanded

The following equations represent the demand and supply for silver pendants.Q D = 50 - 2 PQ S = -10 + 2 P What is the equilibrium price ( P) and quantity ( Q - in thousands) of pendants?

P = $15; Q = 20 thousand

If the quantity of fishing poles demanded is represented by the equation Q D = 60 - P then the corresponding price of fishing poles is represented by the equation

P = 60 - Q D.

Given job losses in U.S. manufacturing, some Americans have called for an increase in tariffs on Chinese products coming into America. If higher tariffs are imposed on clothing produced in China, the price of clothing in America would

increase

Suppose an excise tax of $1 is imposed on every case of beer sold and sellers are responsible for paying this tax. How would the imposition of the tax be illustrated in a graph?

The supply curve for cases of beer would shift to the left by $1

In a city with rent- controlled apartments, all of the following are true except

landlords have an incentive to rent more apartments than they would without rent control.

Santa's actually willing to pay $50 for a dozen roses for Kim on Valentine's Day and he pays $2.50 per Rose for 12 roses is total consumer surplus is equal

$20

In the above figure, the price received by the seller before the tax is ________ per CD, and the price received and kept by the seller after the tax is ________ per CD.

$20, $10

The figure tells us about the market for red roses. The consumer surplus is ________ a day.

$200

the figure tells us about the market for red roses. The consumer surplus is ________ a day.

$200

Suppose that the price of a coffee mug is $2. Lee's marginal cost of producing coffee mugs $0.50 for the first mug, Tammy's marginal cost of producing coffee mugs is $1 for the second mug, Stan's marginal cost of producing coffee mugs is $1.50 for the third mug, Joy's marginal cost of producing coffee mugs is $2 for the fourth mug, and Jody's marginal cost of producing coffee mugs is $3 for the fifth mug. In equilibrium, what is the producer surplus from producing coffee mugs?

$3

If you willing to pay a maximum of $2,500 to attend the Super Bowl this year and they can buy a ticket for $2,050 is consumer surplus is equal

$450

Suppose you're willing to tutor a student for $10 an hour. The student pays you $15 an hour. What is your producer surplus?

$5/hr

The figure illustrates the market for hot dogs on Big Foot Island. The producer surplus is

$60/hr

Suppose the income tax rate is 0 percent on the first $10,000; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on all income above $70,000. Family A has income of $100,000 while Family B has income of $40,000. The marginal tax rates faced by the two families are

40 percent on A and 20 percent on B

The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick. What are the equilibrium price and quantity (in thousands) for Chef Ernie's sushi? DemandSupply P = 80 - QD. P = 50 + 1/2 QS QD = 80 - P. QS = 2P - 100

60 and 20 thousand

The burden of a tax falls entirely on buyers if _____

the price elasticity of demand is zero (perfectly inelastic

New York City, which has had a rent ceiling law for more than sixty years, has many abandoned apartment buildings throughout the city. Which of the following explains this?

Landlords have no incentive to finance maintenance and remodeling of apartment buildings.

Suppose that the price of a bottle of soda is $2. Vonda's marginal cost of production is $1.25 for the first bottle, Galiela's marginal cost of production is $1.50 for the second bottle, Gretchen's marginal cost of production is $1.75 for the third bottle, and Matt's marginal cost of production is $2 for the fourth bottle. Which producer gets no producer surplus?

MATT

At a price of $18 consumers are willing to buy 40 pounds of tiger shrimp. Is this an economically efficient quantity?

No, the marginal benefit of the 40th unit exceeds the marginal cost of that 40th unit

in a figure that shows a supply curve and a demand curve, producer surplus is the area

above the supply curve and below the market price

In the figure above, imposing a tax on the sellers of the product results in a division in which

all of the tax is paid by the sellers.

A price ceiling leads to a(n) ________ if below equilibrium price.

dec. in total surplus

tax incidence

division of the burden of a tax between the buyer and the seller.

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximized, then

economic efficiency is achieved.

________ is maximized in a competitive market when marginal benefit equals marginal cost.

economic surplus

In a competitive market for a private good with no price or quantity regulations, no external cost nor external benefit, low transactions costs, and no taxes or subsidies,

efficiency can be attained in the market with no government intervention

How a sales tax is divided between buyers and sellers is determined by

elasticities of supply and demand

A price floor set above the equilibrium price leads to a(n) ___

excess supply of goods in the market

The figure above represents the market for pecans. Assume that this is a competitive market. At a price of $9

he marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently high

Suppose the government imposes a tax on labor income. Which of the following describe the effect of the tax in the labor market? i.If the demand for labor is more elastic than the supply, workers will bear more of the tax. ii.Employment is not affected because workers need jobs. iii.The tax creates a deadweight loss.

i and iii only

search activity

increases when an effective price ceiling is set on a good

the difference between the ________ and the ________ from the sale of a product is called producer surplus

lowest price a firm would have been willing to accept; price it actually receives

The figure above represents the market for pecans. Assume that this is a competitive market. If 8,000 pounds of pecans are sold

marginal benefit is equal to marginal cost.

In the town of Freedonia, the government declares that all street parking must be free: There can be no parking meters. In an almost identical town of Meterville, parking costs $5 per hour (or $1.25 per 15 minutes). Where will it be easier to find parking: in Freedonia or Meterville?

metervillle

In the figure above, the demand curve shifts rightward from D 0 to D 1 so that D 1 is the relevant demand curve. Suppose the government imposes a rent ceiling of $500 per month. In the short run there will be

neither a shortage nor a surplus of apartments.

In the figure above, the demand curve shifts rightward from D 0 to D 1 so that D 1 is the relevant demand curve. Suppose the government imposes a rent ceiling of $500 per month. In the short run there will be

neither shortage or surplus

If, in a competitive market, marginal benefit is less than marginal cost

the quantity sold is greater than the equilibrium quantity

At the equilibrium price of $15 consumers are willing to buy 80 pounds of tiger shrimp. Is this an economically efficient quantity?

yes, because $15 is the price where the marginal benefit is equal to the marginal cos

If the price of chewing gum is represented by equation P = 25 - 0.5 Q D, then the corresponding quantity of chewing gum demanded is represented by the equation

Q D = 50 -2 P.

If the price of hairspray is represented by equation P = 10 - 0.2 Q D, then the corresponding quantity of hairspray demanded is represented by the equation

QD = 50 -5P.

Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia. What will be the likely effect on the market for sparkling wine in Vinyardia?

Quantity demanded will decrease, quantity supplied will increase, and a surplus will result.

The economically efficient amount of recycling will occur if

Recyclers pay the full cost of picking up recycled products, The government subsidizes recycling by paying for the cost of pickup. All goods are recycled whenever possible. B and C above.

To evaluate recycling, you must consider

The demand for recycled products, The incremental costs to society for recycling products, The value of the land used for landfills, All of the above.

In the figure above, the demand curve shifts rightward from D 0 to D 1 so that D 1 is the relevant demand curve. Suppose the government imposes a rent ceiling of $300 per month. In the short run there will be

a deadweight loss created.

In the figure above, the demand curve shifts rightward from D 0 to D 1 so that D 1 is the relevant demand curve. Suppose the government imposes a rent ceiling of $300 per month. In the short run there will b

a shortage of 200,000 apartments

A sales tax imposed on sellers shifts the supply curve leftward for the taxed good because the

a smaller quantity of the good is sold

A government action that can help correct positive externalities is

a subsidy to consumers of the good that provides external benefits.

In a figure that shows a supply curve and a demand curve, producer surplus is the area

above the supply curve and below the market price

the market demand for a public good can be determined by

adding up how much each consumer is willing to pay for each unit of the public good.

An externality occurs when ________.

an economic activity affects third parties not engaged in the activity

Sewage treatment is an example of

an externality

The public choice model

applies economic analysis to government decision making.

the public choice model assumes that government policymakers

are likely to pursue their own self-interests, even if their self-interests conflict with the public interest

the producer surplus is found by subtracting the ________ and then adding the difference for all u

marginal cost from price

the producer surplus is found by subtracting the ________ and then adding the difference for all units sold

marginal cost from price

A supply curve shows quantities supplied at various prices. It also shows the

marginal cost of production

Suppose your neighbor has a beautiful garden. The benefit that she enjoys from her garden is called ________ and the benefit the rest of the neighborhood enjoys is called ________.

marginal private benefit; marginal external benefit

Producing paper creates pollution. There is no externality in the consumption of paper. The efficient quantity of paper is when the

marginal social benefit of paper is equal to the marginal social cost of paper.

A carbon tax which is designed to reduce pollution is an example of a

market-based policy.

When efficiency is attained, the sum of the total amount of consumer surplus and producer surplus is

maximized

Which of the following would result in a positive externality?

medical research for a cure for ebola

If a profit-maximizing perfectly competitive firm does not have to compensate society for a negative externality, the firm will choose to produce where

price=mc

A market demand curve reflects the

private benefits of consuming a product.

the cost borne by a producer in the production of a good or service is called

private cost

If a local government gives out water filters to low-income families free of charge, they are

private goods

The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of The Waco Kid's cowboy hats is $40

producer surplus will equal $28.

A tax rate system characterized by higher marginal tax rates as income increases is known as

progressive

A street light is a ________.

public good

A fireworks show has been arranged in a park. The ticket for the show is $5 but only 40% of the tickets get sold as spectators can watch the show without entering the park. This is an example of ________.

the free-rider problem

Economic efficiency in a competitive market is achieved when

the marginal benefit equals the marginal cost from the last unit sold.

Conceptually, the efficient level of carbon emissions is the level for which

the marginal benefit of reducing carbon emissions is equal to the marginal cost of reducing carbon emissions.

When a Pigouvian tax is imposed, ________

the marginal private cost curve shifts upward

A positive externality causes

the marginal social benefit to exceed the marginal private cost of the last unit produced.

If the production of a good involves positive externalities, ________.

the market price of the good is lower than its optimal price

Which of the following will lead to an efficient private solution if negative externalities are present in a market?

the parties involved negotiate with each other and reach an agreement.

The price system allocates resources efficiently EXCEPT when

the production of a good affects parties other than its buyers and sellers

If negative externalities are present in a market, ________.

the quantity supplied in the market is larger than the socially optimal level

In the past the federal government often employed what is called a "command-and-control" approach to the reduction of pollution emissions. Many economists are critical of this approach because

they believe a market-based approach will reduce pollution more efficiently.

If the paint on your house was eaten away by the fumes from a factory nearby and you hired a lawyer to sue the polluting firm, your legal fees would be considered

transaction costs

One problem with using taxes to solve economic externalities is that politicians may spend the money on things they like, rather than things their constituents want.

true

Recycling is an economic issue because the goods that are recycled, the land for landfills, and the trucks and labor needed for both recycling and trash disposal are all examples of scarce resources.

true

Rent-seeking behavior, unlike profit-maximizing behavior in competitive markets, wastes society's scarce resources.

true

The possibility of "government failures" should be evaluated before getting the government involved in addressing "market failures."

true

The social problem of smoking in restaurants because smokers and nonsmokers want to use the air in different ways.

true

The video indicated that there is a significant difference between recycling fluorescent lights and plastic bottles.

true

he social benefit of a given level of a public good is the vertical sum of all private benefits for that level.

true

After a tariff is imposed, consumers must pay a price equal to the

world market price plus the tariff.

A product is considered to be rivalrous if

your consumption of the product reduces the quantity available for others to consume

Which of the following statements refers to rent seeking?

"Laws passed by the federal government often provide benefits for a small number of individuals. These individuals, in turn, have an incentive to contribute to the campaigns of politicians who pass these laws.

. What is the value of the deadweight loss at the equilibrium price of $15?

$0

What is the total social value to consumers at the equilibrium price of $15?

$1440

What is the value of producer surplus at the equilibrium price of $15?

$160

What is the value of consumer surplus at the equilibrium price of $15?

$240

Assume there are two people in a society. Person A is willing to pay $140 to have one unit of a public good produced and Person B is willing to pay $160 to have one unit of a public good produced and $140 to have two units produced. As a result, society would be willing to pay a price of ________ of this public good.

$3oo/1 unit

What is the size of the unit tax?

$7

The figure above provides information for a factory that produces chemicals that pollute a waterway. The waterway is used by water skiers. If the waterway is owned by a water ski club and the Coase theorem applies, then the factory will produce ________ tons of chemicals a week.

1 ton

The figure above shows the market for college education in the United States. If the government does not intervene in this market, the number of students going to college is ________ and the efficient number of students is _____

10 million students per year; 14 million students per year

Refer to the information provided in Figure 20.4 below to answer the question(s) that follow.Figure 20.4Refer to Figure 20.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. After the tariff is imposed, this country will import ________ leather wallets.

100

The above figure shows the U.S. market for replacement cell phone batteries. When there is no international trade, the equilibrium price is ________ per battery and when there is international trade with a $2 tariff, then the equilibrium price is ________ per battery

14; 12

John receives a marginal benefit of $80 from one missile. Nick receives a marginal benefit of $50 from one missile. Christina receives a marginal benefit of $65 from one missile. John, Nick, and Christina are the only people in the economy. What is the economy's marginal social benefit from one missile?

195

mike, Joe, and Sam are roommates. They need lamps for their common living room. Lamps in their living room are a public good for these roommates. The marginal benefit that each individual receives from varying numbers of lamps in the living room is given in the table above. If the marginal cost of a lamp is 13, what is the efficient number of lamps for the roommates to purchase?

2

Broomfield city council is deciding how many police officers the city needs. Broomfield's population is 10,000 people. The marginal cost of a police officer is $60,000 per year. The marginal benefit schedule of an average city resident from police protection is shown in the table above. Police protection is a public good. The efficient number of police officers in Broomfield is

3 (60,000/10,000)

A large farming operation which uses a potent fertilizer is located up river from a trout farmer. If property rights of the river exist and transactions costs are low, the amount of pollution will be

A large farming operation which uses a potent fertilizer is located up river from a trout farmer. If property rights of the river exist and transactions costs are low, the amount of pollution will be

In which of the following cases does the tragedy of the commons occur? I.Cattle grazing on private ranches. II.Catching lobsters off the coast of Florida. III.Raising salmon on salmon farms. IV.Using legal services provided by the courts.

II only

Which of the following is true?

If production of a good gives rise

Key limitations on the government correcting "market failures" include:

Information Misaligned incentives between the government and citizens The incentive of the government to tax and spend to help politicians get elected or re-elected. All of the above.

The net effect of smoking in a restaurant is to

It depends - there is no general answer

For certain public projects such as building a dam on a river or a bridge to an island, what procedure is a government likely to use to determine what quantity of a public good should be supplied?

It evaluates the costs and benefits of producing the good.

Beginning in the 1950s economists began to investigate incentives within government. They found that:

One should be cautious in calling on the government to improve economic performance.

According to the video, the key to Viscusi's findings about the net impact of smoking on healthcare costs is that

People who smoke need more medical care, but they also (unfortunately) tend to die younger, and that creates an offsetting reduction in health care costs.

The key problem(s) with externalities is that

Private costs do not equal social costs. Private benefits do not equal social benefits. The government is often inefficient. All of the above. A and B above.

Which of the following characterizes the largest difference between the way decisions are made in the private sector versus the public sector?

The incentive system for individuals to perform efficiently are vastly different.

how does the construction of a market demand curve for a private good differ from that for a public good?

The market demand curve for a private good is determined by adding up the quantities demanded by each consumer at each price but the market demand curve for a public good is determined by adding up the price each consumer is willing to pay for each quantity of the good.

The appropriate charge for trash disposal should be set by

The opportunity cost of using the landfill, The cost of the trucks and labor needed to haul trash away, The impact of buried plastic bottles that only slowly degrade. All of the above. A and B above.

Why might a politician start a costly spending program if its costs exceed its social benefits?

The politician is trying to find ways to raise more money for the next election.

Which of the following leads to the tragedy of the commons?

The use of common pool resources above the socially optimal level

The opportunity cost of using land for a landfill is determined by:

The value of the land before the landfill was developed, minus the cost of the land after the landfill is full.

Rational ignorance suggests that voters will

be ignorant about issues that are of no special interest to them.

With the debris of more than 50 years of climbing on the beautiful high slopes - oxygen canisters, tents, backpacks and even some bodies - Mount Everest has been called the world's highest garbage dump. Currently climbers must pay only a $3,000 trash-collection fee, which is woefully less than the actual cost of collecting trash. If climbers had to pay a higher trash-collection fee, the use of this common resource would

become more efficient.

the total amount of producer surplus in a market is equal to the area below the supply curve.

false

Which of the following gives rise to a positive externality?

consumption of a drug to cure a common disease

When the government taxes a firm that generates external costs, the firm will produce

fewer units of output than before the tax was imposed in order to continue maximizing profits.

Which of the following is an example of a common resource?

elephants in the wild

when a person throws a cigarette out of a car window and starts a brush fire, this is

example of an external cost

Financial contributions to the campaigns of members of Congress, state legislators, and other elected officials by firms that seek special interest legislation that make the firms better off are

examples of rent seeking.

According to the video, the government should ban smoking in restaurants because of the diseases caused by passive smoking.

false

Banning smoking in restaurants is clearly economically efficient because passive smoke is harmful.

false

Economics shows that it is inefficient to recycle plastic bottles because they have little value.

false

Recycling is an economic problem because the land is substantially damaged by the creation of garbage dumps

false

Recycling is not an economic problem because there is only so much land on Earth.

false

The Coase Theorem asserts that government intervention is a prerequisite for addressing externality problems.

false

The best solution to water pollution is to make the responsible people clean the water and return it to its natural state.

false

The government can be relied on to efficiently solve problems associated with pollution through (Pigovian) taxes.

false

When there is a positive externality in a free market, too much of the good is produced and consumed.

false

he use of landfills means the land will lose all its value for subsequent use.

false

the point of the video is that the government can seldom enhance economic efficiency

false

Which of the following is an example of a product that is nonexcludable and rivalrous?

free concert w limiting seating

which of the following is an example of an ordinary private good

furniture

In general, who will benefit as the result of a tariff? I.Domestic producers II.Domestic consumers III.The domestic government

i and 3

the Coase theorem states that

if transactions costs are low, private bargaining will result in an efficient solution to the problem of externalities.

Which of the following situations will arise in the domestic market following the imposition of a tariff

imports decrease, domestic production increases, prices increase

An advantage of imposing a tax on the producer that generates pollution is that

it forces the polluting producer to internalize the external cost of the pollution.

An example of an activity that generates an external cost is

keeping a junked car parked on your front lawn

If the marginal cost of producing a public good is less than society's total willingness to pay per unit, then

less than the optimal amount of the public good is being produced

The Coase theorem relies on internalizing externalities through ____

negotiations between the parties involved

A green pasture has turned barren due to overgrazing. This happened because the pasture was ___

non-excludable but rival

The tragedy of the commons occurs because some goods are ________ in consumption.

non-excludable but rival

According to the video, W. Kip Viscusi studied tobacco smoking and concluded that

none of the above

A common resource is

nonexcludable and rival in consumption.

A radio signal broadcast through the air is ________ in consumption, and listeners are ________.

nonrival; nonexcludable

People who live in apartment buildings across from a football stadium are able to watch football games from the balconies of their apartments instead of paying for tickets to sit inside the stadium. For these free riders, the football games are

nonrival; nonexcludable (public goods)

Private producers have no incentive to provide public goods because

once produced, it will not be possible to exclude those who do not pay for the good.

A good is non-rival in consumption if ________

one person's use of the good does not preclude consumption by others

In economics, the term "free rider" refers to

one who waits for others to produce a good and then enjoys its benefits without paying for it

If protective import-restricting tariffs are imposed by a country, in the majority of cases that nation's consumers end up

paying a higher price for the good than they otherwise would.

Assume that production from an electric utility caused acid rain and that the government imposed a tax on the utility equal to the cost of the acid rain. This is an example of

pigouvian tax

Which of the following is an example of a positive externality?

planting trees along a sidewalk which add beauty and create shad

The production of a certain fertilizer emits a gas that keeps away mosquitoes and other insects from the surrounding community. This is an example of a ________.

positive externality

the tragedy of the commons is the absence of incentives to

prevent overuse and depletion of a common resource.

A Pigouvian subsidy leads to a socially efficient outcome by ______

raising individuals' marginal benefit from consumption

Which of the following is an example of a common resource

sea otters in the coastal waters of the Pacific Ocean

Governments require immunizations of school children and offer immunization shots for free to low income people because:

shots are private goods with external benefits

In England during the Middle Ages each village had an area of pasture on which any family in the village was allowed to graze its cows and sheep without charge. Eventually, the grass in the pasture would be depleted and no family's cow or sheep would get enough to eat. The reason the grass was depleted was

the area of pasture was nonexcludable and the consumption of the grass was rival

In the figure above, suppose the market is at equilibrium. Then area B is the

amount of the producer surplus

The tax incidence on buyers is higher if ________

the elasticity of the market demand curve is higher than the elasticity of the market supply curve

Suppliers will be willing to supply a product only if

the price received is at least equal to the additional cost of producing the product.

suppliers will be willing to supply a product only if

the price received is at least equal to the additional cost of producing the product.

If a rent ceiling is below the equilibrium rent, some allocation scheme must be used. The allocation methods include all of the following EXCEPT

charging equilibrium rent

he "invisible hand" refers to the notion that

competitive markets send resources to their highest valued uses.

Between the marginal benefit from a new pair of shoes in the price of a new pair of shoes is the

consumer surplus from that Pair of shoes

A regressive tax is a tax for which people with lower incomes

pay a higher percentage of their incomes in tax than do people with higher incomes.

Graphically, producer surplus is the area under the

price and above the supply curve, up to the relevant quantity.

The government of Lithasia has decided to set a minimum price for certain agricultural products in order to safeguard the interests of farmers. This is an example of a ________.

price floor

Producer surplus is the ________ summed over the quantity produced.

price of the good minus the marginal cost of producing it

A ________ system is one in which households pay the same percentage of their incomes in taxes regardless of their income level.

proportional

If you pay $2,000 in taxes on an income of $20,000, and a tax of $2,700 on an income of $30,000, then over this range of income the tax is

regressive

If, as your taxable income decreases, you pay a larger percentage of your taxable income in taxes, then the tax is

regressive

Scenario: There are 4 households in a locality. The annual income of the first household is $20,000, the annual income of the second household is $47,000, the annual income of the third household is $50,000, and the annual income of the fourth household is $71,000.Refer to the scenario above. If the income tax rate for the fourth household is higher than the income tax rate for the second household, it can be inferred that the government follows a ________ income tax system.

regressive

If a good has a tax levied on it, sellers respond to the price that excludes the tax and not the price with the tax because

sellers do not get to keep the tax revenue

The demand curve for pizza in Foodieland is vertical. If a tax is imposed on each pizza bought, _____

tax burden falls entirely on consumers

A price ceiling does NOT lead to a deadweight loss if ________.

te equilibrium market price lies below the price ceiling

marginal cost is

the additional cost to a firm of producing one more unit of a good or service.

The total amount of producer surplus in a market is equal to

the area above the market supply curve and below the market price.

he incidence of a per- unit tax on a good is identical for buyers and sellers of the good if:

the buyers and sellers of the good are equally sensitive to price changes

A tax bracket is

the income range within which a particular tax rate applies.


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