Econ Exam 3 Multiple Choice Questions

A library's collection of e-books is a ___________ A. Club good B. Public good C. Common pool resource D. Private good

A.

A production function shows _____________ A. the number of workers employed and the corresponding output levels that will be produced B. the number of workers a firm will employ at different possible wage rates C. the output levels a firm will produce at different possible prices D. the number of workers employed and the firm's cost of production

A.

An example of the proportional tax is the ________ A. Medicare tax B. income tax C. property tax D. Social Security tax

A.

Derived demand is the demand a firm has for _____________ A. the factors of production that enable it to produce output that is sold in product markets B. one factor of production because the price of another factor of production has changed C. lower taxes and fewer regulations D. advertising to increase the sales of its products

A.

Direct regulation is _______________ A. direct actions by the government to control the amount of an activity B. consumer sovereignty in a competitive market C. the government determining the incidence of a tax D. using the tax system to influence behavior

A.

Is the entire burden of the tax always borne by those on whom it is imposed? A. Not necessarily, since the burden of the tax depends on price elasticity B. Not necessarily, since the burden of the tax falls on producers C. Yes, since taxes are paid by producers D. No, the burden of the tax is always passed along to others

A.

Ludwig mentions that Frank, the local rancher, is inflating land prices by buying too much land. This is an example of... A. A pecuniary externality B. A positive externality C. A negative externality D. Not an externality

A.

The Coase theorem states that ____________. A. private bargaining will result in an efficient allocation of resources B. public and private partnerships will result in an efficient allocation of resources C. government and private partnerships will result in an efficient allocation of resources D. public bargaining will result in an efficient allocation of resources

A.

What approach would be the least effective way to deal with free riders? A. Exclude citizens from benefiting from the good or service B. Offer citizens a favor or a small gift if they agree not to free ride C. Appeal to their civic sense of responsibility D. Threaten to expose the free riders to their neighbors

A.

Which of the following is a problem that black markets pose in an economy? A. Governments use resources to enforce the law B. less variety of goods for consumers C. legitimate businesses extracting surplus D. the government being forced to levy lower taxes E. the direct costs of obeying the government regulations

A.

Examples of direct regulation include ______________ (multi) A. fishing quotas B. subsidies C. price floors D. taxes E. laws restricting alcohol purchases

A. C. & E.

A black market is _____________ A. a legal market without consumer sovereignty B. a nonlegal market for regulated goods and services C. a regulated market with excessive profits D. an illegal market with negative externalities

B.

A mosquito control program in a city is a ___________ A. Club good B. Public good C. Common pool resource D. Private good

B.

A video on YouTube is a ___________ A. Club good B. Public good C. Common pool resource D. Private good

B.

An example of the progressive tax is the ________ A. sales tax B. income tax C. property tax D. Social Security tax

B.

George mentions that Ms. Davis has planted some lovely new roses in front of her store. This is an example of... A. A pecuniary externality B. A positive externality C. A negative externality D. Not an externality

B.

Given that there are cost involved with government intervention in in an economy, government still choose to intervene in markets to ___________ A. implement taxation B. reduce inequality C. increase bureaucracy D. decrease deficits E. generate black markets

B.

In a competitive labor market, the profit-maximizing number of workers that a firm will hire occurs where the _____ A. marginal product of labor is equal to the market wage B. value of marginal product of labor is equal to the market wage C. marginal product of labor stops increasing D. marginal product of labor equals zero

B.

What is the efficiency implication of imposing an estate tax? A. It is inefficient because it increases saving B. It is inefficient because it reduces investment C. It is efficient because it prompts more consumption D. It it efficient because it allows more government spending

B.

What is the equity implication of imposing an estate tax? A. It is fair because it increases economic status B. It is fair because it reduces inequality C. It is fair because it increases government revenue D. It is unfair because it reduces opportunities

B.

Which of the following is not an important determinant of wage inequality within an economy? A. Differences in human capital B. Differences in connections to influential people C. Differences in compensating wages D. Discrimination in the job market

B.

What types of goods are likely to be traded in a black market? (multi) A. Health care B. Prostitution C. Protective services D. Education E. Drug dealing

B. & E.

The Coase Theorem will breakdown when ______________ (multi) A. the dispute becomes a high priority to the agents involved B. transaction costs become high C. when property rights are not clearly defined D. there are a large number of agents E. agents decide to negotiate directly with each other

B. C. & D.

The primary types of tax systems are _____________ (multi) A. marginal tax system B. regressive tax system C. progressive tax system D. proportional tax system E. average tax system

B. C. & D.

According to the law of diminishing returns, _____________ A. the ratio of output to labor rises then eventually falls B. as the quantity of labor increases, the quality of the labor being employed decreases C. the marginal productivity of an additional unit of labor eventually decreases as the quantity of labor increases D. the total productivity of labor eventually decreases as the quantity of labor increases

C.

An example of the regressive tax is the ________ A. sales tax B. income tax C. property tax D. Social Security tax

C.

Compensating wages are the wage premiums ______________ A. college-educated workers receive for enduring four (or more) years of college B. public-sector receive compared to private-sector workers C. paid to attract workers to occupations to otherwise undesirable jobs D. union workers receive relative to nonunion workers

C.

How would you depict the trade-off between equity and efficiency on a graph? A. Poverty on one axis and efficiency on the other with a negatively-sloped function B. Equality on one axis and deadweight loss on the other with a negatively-sloped function C. Inequality on one axis and social surplus on the other with a positively-sloped function D. Equity on one axis and inefficiency loss on the other with a U-shaped function

C.

Jeb mentions that the hog farm down the road from his house is creating a very nasty smell. This is an example of... A. A pecuniary externality B. A positive externality C. A negative externality D. Not an externality

C.

Radio spectrum is a ___________ A. Club good B. Public good C. Common pool resource D. Private good

C.

Tax incidence refers to _______________ A. the extent to which a tax is progressive B. how much revenue a tax generates C. who bears the burden of tax D. the average tax rate

C.

A firm will employ physical capital until _______________ A. the ratio of capital's marginal product to the rental price equals 1 B. the value of marginal product of capital (VMPK) equals the value of marginal product of labor (VMPL) C. capital's contribution to the firm's profit is maximized D. the value of marginal product of capital (VMPK) equals the rental price of capital

D.

A government would want to be on this curve where ________ A. inequality does not exist B. inefficiencies do not exist C. the trade-off between reducing social inequality and reducing social efficiency is greatest D. there is no correct answer to this question, as the answer depends on a government's value judgements

D.

Health insurance is a ___________ A. Club good B. Public good C. Common pool resource D. Private good

D.

Human capital is the ______________ A. skills and knowledge that people obtain by furthering their schooling B. experience that people derive from spending more time on a job C. physical capital that humans are equipped with on their jobs D. A and B only

D.

Lauren mentions that it is particularly windy today. This is an example of... A. A pecuniary externality B. A positive externality C. A negative externality D. Not an externality

D.

The value of marginal product of labor (VMPL) is __________ A. given by the marginal product of labor times the price of the firm's output B. the firm's additional profit from hiring another worker C. the contribution of an additional worker to a firm's revenues D. A & C only

D.

What approach would be the least effective way to deal with the overfishing problem? A. Restock the lake more often with fish B. Charge a tax per fish caught C. Enact a law limiting the number of fish that can be caught per person D. Limit who is allowed to fish in the lake

D.

Which of the following is a cost associated with government intervention in an economic system? A. Underemployment B. Externalities C. Inequality D. Bureaucracies

D.

Which of the following is not an externality? A. Jose, who is allergic to pollen, is sick from the flowers that grow in his neighbor's garden B. Rochelle has asthma caused by the pollution of a local factory near her home C. Alisha did not sleep well because her neighbor was playing loud music D. Jordan has lung cancer from smoking cigarettes

D.

Why are there two different views on the taxation on labor supply in the United States? A. The effect of a tax on labor supply depends on the elasticity of labor supply B. It depends on normative questions such as how much to tax or how much government intervention is necessary C. The effect of a tax on labor supply depends on the amount of deadweight loss created by the tax D. All of the above

D.