Micro Test #3

With a lump-sum tax, the average tax rate for high income tax payers will be

lower than the average tax rate for low income taxpayers

(Refer to Figure 10-11) Taking only private value and private cost into account, total surplus at the market equilibrium amounts to

$4,320

(Refer to Figure 9-5) Without trade, total surplus amounts to

$6,480

(Refer to Figure 9-1) In the absence of trade, the equilibrium price of coffee in Guatemala is

$90

Most Americans agree that our tax system should (i) be fair (ii) be efficient (iii) impose as small a cost on society as possible (iv) use a value added tax (VAT) instead of income tax

(i), (ii), and (iii) only

(Refer to Table 12-9) Bill is a single person whose taxable income is $35,000 a year. What is his average tax rate in 2012?

17.6%

(Refer to Figure 9-10) The are bounded by the points (Qo, Po), (Q2, P1), and (Q1, P1) represents

All of the above are correct

Which of the following statements is true both pollution permits and corrective taxes?

All of the above are correct

(Refer to Table 12-22) A lump-sum tax is illustrated by tax

D

A budget surplus occurs when government receipts fall short of government spending.

FALSE

According to the benefits principle, it is fair for people to pay taxes based on their ability to shoulder the tax burden.

FALSE

The tax on gasoline causes deadweight losses, as is the case with all taxes

FALSE

Tolls are not effective in altering people's incentives to drive during rush hour.

FALSE

Under the Principles of Guidelines for land and water related resource project planning, the U.S. Army Corps of Engineers develops the NED Plan that reasonably minimizes net national economic development benefits.

FALSE

The U.S. Army Corps of Engineers is a Federal Agency that has primary missions in the following three areas.

Flood Risk Management, Deep Draft Navigation, and Inland Navigation

(Refer to Figure 10-6) Which price represents the equilibrium price of the product in this market?

P

Import quotas and tariffs both cause the quantity of imports to fall.

TRUE

NAFTA is an example of a multilateral approach to achieving free trade.

TRUE

Some states do not have a state income tax

TRUE

The government can internalize externalities by taxing goods that have negative externalities and subsidizing goods that have positive externalities.

TRUE

When a driver enters a crowded highway he increases the travel times of all other drivers on the highway. This is an example of a negative externality.

TRUE

When free riders are present in a market, the market generally fails to provide the efficient outcome.

TRUE

Which of the following statements about the Coase theorem is true?

Underlying the results of the Coase theorem is the idea that private parties can bargain without cost over the allocations of resources.

An externality is an example of

a market failure

A tax levied on the total amount spent in retail stores is called

a sales tax

A patent is used to

assign property rights

As with many public goods, determining the appropriate level of government support for the production of general knowledge is difficult because

benefits are hard to measure

Imagine a 2,000-acre park with picnic benches, tress, and a pond. Suppose it is publicly owned, and people are invited to enjoy its beauty. When the weather is nice, it is difficult to find parking on summer afternoons. Otherwise, it is a great place. An efficient solution to the parking problem would be to

charge higher prices for parking at busy times.

The supply curve for a product reflects the

cost to sellers of producing the product

(Refer to Figure 9-20) With trade, Vietnam will

export 1,500 units of rice

A tax that is higher for men than for women violates the criterion of

horizontal equity

Horizontal equity in taxation refers to the idea that people

in equal conditions should pay equal taxes

The Tragedy of the Commons

is eliminated when property right are assigned to individuals

The value and cost of goods are easiest to determine when the goods are

private goods

One tax system is less efficient than another if it

raises the same amount of revenue at a higher cost to taxpayers

The greatest difficulty with cost-benefit analysis of a public project is determining

the value or benefit of the project

(Refer to Table 10-4) The table represents a market in which

there is a negative externality

An optimal tax is one that minimizes the

total deadweight loss from the tax

Trade enhances the economic well-being of a nation in the sense that

trade results in an increase in total surplus

In many cases the Coase theorem does not work well because

transaction costs are too high