Unit 2 Questions

Suppose the Social Security tax rate is 6.2 percent of earnings up to a maximum of $117,000 beyond which there is no additional tax. Zia has earnings of $140,000 and Paul has earnings of $60,000. What is Zia's average tax rate and what is Paul's average tax rate?

5.18 and 6.20

at the price of $55, two iphones will be purchased, but there are five willing sellers. based on this information, the highest possible producer surplus is _____________

80

Market inefficiencies result from all of the​ following, except: A. Negative externalities. B. Social benefits or costs. C. Pecuniary externalities. D. Positive externalities.

C

A difficult problem for central planners is bringing together those economic agents whose interests coincide in order to trade. This is known as the​ ____________ problem. A. communication B. collaboration C. incentive D. coordination

D

Social surplus is maximized when the​ ___________. A. highest-value buyers are making a purchase and the​ lowest-cost sellers are selling. B. buyers and sellers as distinct groups are doing as well as they possibly can. C. competitive market is in equilibrium. D. all of the above.

D

Terms of trade is the​ ____________. A. time required to produce a good or service that is traded. B. legal document that trading partners sign. C. benefit received from trade. D. exchange rate of goods for goods.

E

Why is it difficult for the market to deliver socially efficient quantities of goods like clean air or street​ lighting?

These are examples of public goods​; ​therefore, even if you do not pay for the good you still get to enjoy it.

Economies with lower taxes ___________ production and ________ available social surplus. One possible cost of such economies is that the gap between the rich and poor may _________.

encourage; increase; increase

In the presence of free​ trade, the producers of cheese in Wisconsin will _______ while the consumers of cheese will _______

gain; lose

For​ Sweden, the overall ______ because of trade are represented by the​ area(s) ____ .

gains; N

Kentucky has a production possibilities curve for the production of wine and cotton as shown in the graph. If Kentucky moves its resources increasingly into the production of​ cotton, the opportunity cost of doing so _________ at an _______________ rate Which of the following factors will shift the PPC outward in the long​ run? A. A military conflict that destroys infrastructure. B. The development of a faster computer. C. A hurricane demolished a factory. D. The employment of the less educated workforce.

increases; increasing; B

When a country opens itself to trade and becomes an importer of goods and​ services, sellers _______ and buyers _______

lose; win

In the case of the negative​ externality, the socially efficient output will be _______ relative to the market quantity.

low

You have just been appointed as the County Commissioner of Hazard County. You realize that you should learn some economic concepts that will be useful to you in your new job. In a free​ market, efficient firms will produce where ____________ equals ______________.

marginal cost; marginal revenue

In a market​ economy, the alignment of interests is accomplished through the use of ______

prices

The​ equity-efficiency trade-off states that when social inequality is​ high, further increases in inequality ________ social surplus. The flatter the​ equity-efficiency curve, the _________ the cost of reducing social inequality in terms of social surplus.

reduce; greater

social security tax is an example of a ___________ tax

regressive

all else being equal, the flatter the demand curve, the _________ the social surplus in a market

smaller

is maximized when firms product at equilibrium in a free market

total surplus

Consider a simple opportunity for​ trade: You are renting a new condo and the previous tenant offers to sell her old couch. You are the sole buyer and you have a willingness to pay of ​$200. The previous tenant is the sole seller and has a willingness to accept of ​$110. Assuming you and the previous tenant arrive at a mutually beneficial​ agreement, the social surplus will be ______.

$90

In a society approaching perfect equality​ (everybody having the same​ income), the Gini coefficient would be ____.

0

at a price of $55 per iphone, the consumer surplus us _____

20

at a price of $55 per iphone, the lowest possible producer surplus is _______

20

Suppose a country has a flat income tax of 22 percent. John has earnings of ​$120,000 and Maria has earnings of ​$20,000. ​John's average tax rate is _____ percent and​ Maria's average tax rate is _____ percent. ​(Enter your responses as integers.​)

22; 22

Absolute advantage is the ability of an​ individual, firm, or country to​ produce: A. more of a certain good than other competing​ producers, given the same number of resources. B. a certain good at a lower opportunity cost than other producers. C. more of a certain good than other competing​ producers, given more resources. D. a certain good at a lower total cost than other producers.

A

Are all efficient outcomes also​ equitable? Explain. A. There is really no definitive answer to this question since issues surrounding efficiency and equity are the domain of normative​ economics, where subjective value judgments are made. B. No, the only efficient outcome that is equitable is the one that results in an equal distribution of goods across society. C. Yes, if an outcome is​ efficient, then by​ definition, it maximizes social surplus and consequently must be equitable. D. No, only those efficient outcomes that produce a​ rich-to-poor income ratio less than 5.0 are equitable.

A

Assume that some of the buyers in this market are now willing to pay more for a drill than they did earlier. Does this mean that the market for drills is Pareto​ efficient? Explain your answer. A. Yes, as long as the market equilibrium still​ holds, the outcome is still Pareto efficient. B. No, a greater willingness to pay will unbalance the social​ surplus, making the outcome less than Pareto efficient. C. Unable to determine. It depends on the extent of the increased willingness to pay.

A

In which of the following scenarios would a country export a​ good? A. The domestic price for the good is below the world price. B. The world demand for the good is lower than the domestic demand. C. The domestic demand for the good is lower than the domestic supply. D. The world price for the good is below the domestic price.

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. No, the burden of the tax is always passed along to others. D. Yes, since taxes are paid by consumers

A

Negative externalities impose an additional cost​ that: A. is not explicitly recognized by the buyers and sellers in the market. Your answer is correct. B. is reflected in the producers supply curve. C. is reflected in the consumers demand curve. D. needs to be subtracted from the producers marginal cost to determine true market price.

A

Social surplus is the​ ____________. A. total value from trade in a market B. difference between the amount that buyers actually pay and what they wish to pay. C. difference between consumer surplus and producer surplus D. excess of aggregate demand over aggregate supply.

A

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

A

The market for electric drills in a certain country is characterized by a large number of buyers. The market for drills is in equilibrium. Does this also mean that it is Pareto​ efficient? Explain your answer. A. Yes, with the market in​ equilibrium, no one participant can be made better off without someone else being harmed. B. No, an outcome can only be Pareto efficient if equity is also achieved. C. Yes, a Pareto efficient outcome occurs with the market in equilibrium since everyone is pleased with the outcome. D. No, a Pareto efficient outcome occurs only when every buyer and seller engages in a transaction.

A

To reduce inequality and poverty in an​ economy, the government uses a​ ___________. A. progressive tax system to fund transfer payments. B. proportional tax system to increase equity. C. marginal tax system to generate wealth. D. regressive tax system to redistribute income from the rich to the poor.

A

What is the intent of a Pigouvian​ tax? A. To induce producers of a negative externality to reduce production to the socially optimal level. B. To mandate by government fiat the reduction of production to the socially optimal level. C. To eliminate the force of the invisible hand in market transactions. D. To encourage producers of a negative externality to increase production to the socially optimal level.

A

Which of the following best illustrates the tragedy of the​ commons? A. Overfishing in public waters. Your answer is correct. B. Sneaking into a concert without paying for a ticket. C. Donating to the World Wildlife Fund. D. Buying a Nintendo DS instead of funding the public library.

A

You are the County Commissioner of Hazard County.​ Dwight's neighbors bring a complaint before you that​ Dwight's hog farm is creating a terrible​ odor, and they are demanding government action. Which of the following is not a course of action that you could take to satisfy the​ neighbor's demands? A. Private bargaining. B. Create a law that hog waste must be treated. C. Mandate a lower level of hog production. D. Enact a tax against air pollution.

A

The figure at right shows a production possibilities curveLOADING... ​(PPC) for Joe. He can spend his time making pizzas or chocolate cakes. For​ Joe, which production points are​ attainable? ​(Check all that apply.​) A. Point A. B. Point B. C. Point C. D. Point D. E. Point E. For​ Joe, which production points are​ efficient? ​(Check all that apply.​) A. Point A. B. Point B. C. Point C. D. Point D. E. Point E.

A, B, D, E A,B

Which of the following statements are​ true? ​(Check all that apply.​) A. The consumer surplus is indicated by the areas Lplus+Mplus+N. ​Therefore, Swedish consumers are better off because of trade. B. The producer surplus is indicated by the areas O plus+M. ​Therefore, Swedish producers are better off because of trade. C. The producer surplus is indicated by the area O.​ Therefore, Swedish producers are worse off because of trade. D. The consumer surplus is indicated by the area L.​ Therefore, Swedish consumers are worse off because of trade.

A, C

The primary types of tax systems are​ ___________. ​(Check all that apply​.) A. proportional tax systems. B. average tax systems. C. progressive tax systems. D. marginal tax systems. E. regressive tax systems.

A, C, E

In each of the following​ cases, determine whether the traded good or service is an export or import A. California wine that is sold in New Jersey is an ________ for California and an import for New Jersey. You take a vacation in​ Paris, France. B. Your vacation is an ______ for the United States and an ________ for France. A construction company in China buys tractors from​ Caterpillar, which is based in Illinois. C. The tractors are an _____ for China and an ______ for Illinois. You go to your doctor in​ Cincinnati, Ohio, and she takes an​ x-ray of your broken arm. The​ x-ray is read by a technician in​ Mumbai, India, and he sends a report via email to your doctor. D. The reading is an ______ for India and an ______ for the United States.

A. export B. import; export C. import; export D. export; import

Justin has 5 days in a work​ week; each day he can create either 2 Android apps or 1 Apple app. Pallas also has 5 days to​ work; each day she can produce either 2 Android apps or 3 Apple apps. Justin has a comparative advantage in the production of ___________ apps.

Android

According to the principle of comparative​ advantage, both parties will engage in a trade if the trading​ price: A. is below the market price. B. lies between their opportunity costs. C. is higher than the​ seller's cost to produce. D. is lower than the​ buyer's cost to produce.

B

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

B

Bilateral negotiations often lead to prices​ that: A. are the same as the theoretical equilibrium price. B. approach the theoretical equilibrium price. C. are often lower than the theoretical equilibrium price. D. are often higher than the theoretical equilibrium price.

B

Externalities are called market failures because they​ ___________. A. raise prices for everyone. B. cause markets to produce suboptimal social outcomes. C. raise prices in an unfair manner for the poor. D. cause markets to overproduce when there is inflation.

B

If you were to recommend a​ command-and-control approach, a disadvantage would be that it​ ___________. A. is more efficient than the Pigouvian tax approach. B. creates few incentives for innovation. C. leads to​ pro-government sentiment. D. puts too much of a burden on a producer.

B

Justin has 5 days in a work​ week; each day he can create either 2 Android apps or 1 Apple app. Pallas also has 5 days to​ work; each day she can produce either 2 Android apps or 3 Apple apps. Pallas has a comparative advantage in the production ofApple apps. Which of the following statements explains why Pallas has a comparative advantage in the production of Apple​ apps? A. Her opportunity cost of producing an Apple app is greater than​ Justin's opportunity cost of producing an Apple app. B. Her opportunity cost of producing an Apple app is less than​ Justin's opportunity cost of producing an Apple app. C. Her opportunity cost of producing an Apple app is equal to​ Justin's opportunity cost of producing an Apple app.

B

Now suppose their office passes a rule that says employees are not allowed to listen to music on their speakers while working. As​ before, Jones and Smith can bargain at a zero cost. What will be the final outcome in this​ case? A. Smith stops listening to music and both of them receive net benefits worth more than​ $350. B. Jones buys headphones to listen to​ music, giving him net benefits worth​ $150. Smith does not suffer any damages. C. Jones buys headphones to listen to​ music, and both of them suffer damages worth more than​ $200. D. Smith gives Jones headphones as a​ gift, giving Jones net benefits worth​ $150 and Smith suffers damages worth​ $300.

B

Once planners have successfully brought economic agents​ together, a second problem of aligning the interests of the economic agents must be solved. This is known as the​ ___________ problem. A. alignment B. Incentive C. integration D. coordination

B

Positive externality will occur when​ _____. A. the marginal social benefit is equal to marginal social cost to produce at the market equilibrium B. the marginal social​ benefit is greater​ than the marginal cost to produce at the market equilibrium C. the marginal social benefit is equal to deadweight loss D. the marginal social benefit is equal to marginal private benefit

B

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

B

The mercantilist economic doctrine was widely followed from the sixteenth to the eighteenth centuries in Europe. Mercantilists advocated the use of tariffs to restrict​ trade, as they believed that countries that export more than they import will increase wealth. What could be the problem with such an economic​ policy? A. Consumers pay a price that is lower than the world​ price, increasing consumer surplus. B. Consumers pay a price that is higher than the world​ price, reducing consumer surplus. C. Total surplus in the economy rises. D. Domestic producers are​ harmed, reducing producer surplus

B

The​ free-rider problem arises when an individual​ ____________. A. pays for a good only when he or she is in the top quartile of people needing the good. B. does not pay for a good because nonpayment does not prevent consumption. C. pays for a good only when being monitored by the authorities for noncompliance. D. does not pay for a good because that individual is engaging in illegal activity.

B

Which of the following is not an example of when the free market fails to generate maximum social​ surplus? A. Public goods. B. Private goods. C. Common pool resources. D. Externalities.

B

Which of the following is not one of the common arguments against free​ trade? A. The threat of homogenization to a culture's uniqueness. B. Taxes decrease comma depriving governments of needed revenues. C. Potential negative effects on local jobs.Potential negative effects on local jobs. D. Allowing countries to specialize in the production of only one good may result in the creation of banana republics. E. The stock of certain types of animals is endangered comma threatening species extinction.

B

Which of the following statements is true regarding pecuniary​ externalities? A. It is a branch of the negative externality. B. It affects other people only through market price. C. It causes market inefficiencies. D. It leads to wrong equilibrium quantities.

B

The graph shows the production possibility curves for William and Michael. Based on the​ graph, William has the comparative advantage in producing refrigerators. His opportunity cost of producing this good is 3/4 of the other good. Which of the following statements will be true for William and Michael in the above​ scenario? ​(Check all that apply.​) A. William has an absolute advantage in both goods. B. Each would specialize in the good he has a comparative advantage in producing. C. They will not specialize in the good they have a comparative advantage in producing. D. They will carry out trade to be better off.

B, D

Which of the following is the correct definition of marginal social​ cost? ​(Check all that apply​.) A. marginal cost plus+marginal benefit. B. marginal private cost plus+marginal external cost. Your answer is correct. C. marginal cost of the externality plus+marginal external cost. D. marginal private cost plus+marginal cost of externality.

B, D

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

B, D, E

A production possibilities curve​ (PPC) ___________. A. determines the levels of imports and exports within a country. B. shows the​ trade-off between price and quantity of produced goods or services. C. shows the relationship between the maximum production of one good for a given level of production of another good. D. shows the combinations of inputs that can create a specific level of output.

C

All of the following statements about Pigouvian taxes are​ true, except: A. They use a market based approach. B. The​ per-unit tax should equal the marginal external cost. C. They are designed to increase quantity toward optimal quantity. D. They cause the market supply curve to shift left.

C

An individual or a firm can internalize an externality by​ ___________. A. doubling the size of the externality. B. disputing that an externality exists. C. paying the cost of the externality. Your answer is correct. D. ignoring the externality.

C

Compared to the market for electric​ drills, the market for vintage buttons has fewer buyers and sellers. Social surplus is likely to be higher in the market for drills than in the vintage button market. Is it then correct to assume that the outcome in the drills market is Pareto efficient while in the vintage button market it is​ not? Explain. A. Yes, social surplus is positively correlated with Pareto efficiency. B. No, both markets attain Pareto efficiency because both involve goods that have resale potential. C. No, market size has no bearing on the attainment of Pareto efficiency. D. Yes, the market for drills is clearly an important market while that for vintage buttons is of less significance.

C

Complete specialization occurs when each​ individual, firm, or​ country: A. does not rely on trade for goods and services. B. produces only what it is known for. C. produces only what it has a comparative advantage in. D. consumes specialty goods instead of generic equivalents.

C

If the implementation of a price control results in a deadweight​ loss, which of the following statements is​ true? A. The market price is below the price ceiling. B. The market price is the same as the price floor. C. There is excess demand. D. The consumer surplus plus and the producer surplus remain unchanged.

C

Justin has 5 days in a work​ week; each day he can create either 2 Android apps or 1 Apple app. Pallas also has 5 days to​ work; each day she can produce either 2 Android apps or 3 Apple apps. Which of the following statements explains why Justin has a comparative advantage in the production of Android​ apps? A. His opportunity cost of producing an Android app is equal to​ Pallas's opportunity cost of producing an Android app. B. His opportunity cost of producing an Android app is greater than​ Pallas's opportunity cost of producing an Android app. C. His opportunity cost of producing an Android app is less than​ Pallas's opportunity cost of producing an Android app.

C

On the Production Possibilities​ Curve, possible production levels are​ represented: A. at any point below the curve. B. at any point on the curve. C. at any point on or below the curve. D. at any point above the curve.

C

Suppose the minimum price is given as​ $55 (a​ "price floor"). Which of the following statements is true in the market for used​ iPhones? A. Dave and Ian will each be willing to buy an iPhone. B. Kim and Ty will each be willing to buy an iPhone. C. Madeline and Katie will each be willing to buy an iPhone. Your answer is correct. D. Sean and Dave will each be willing to buy an iPhone.

C

Suppose the production of a particular good causes a negative externality. Based on market forces​ only, how will this impact the production levels for a factory if negative externalities are​ present? A. It will produce the same level regardless of whether externalities are present. B. It will produce the good below the socially efficient level. C. It will produce the good above the socially efficient level. D. Negative externalities do not impact production levels.

C

Terms of trade are determined​ ____________. A. on the basis of absolute advantage. B. by sellers. C. on the basis of opportunity costs. D. by buyers.

C

The government of a certain country decides that all its citizens should be equally well off. It decides to redistribute money so that each person has a roughly equal share of the total income. How would this policy affect economic activity in the​ country? A. It would be adversely affected since the poor are generally incapable of wisely investing money. B. It would be boosted since the poor will now be spending funds the rich would have otherwise saved. C. It would be adversely affected since incentives to work or seek profits would be greatly diminished. D. It would be enhanced by the euphoria and sense of unity brought about by the creation of an egalitarian society.

C

The government runs a budget surplus when​ ____________. A. the budget is balanced. B. tax revenue falls below its spending. C.tax revenue exceeds its spending. D. consumption exceeds its spending.

C

The tragedy of the commons results when​ ___________. A. too many public goods are provided. B. common pool resources are underused. C. common pool resources are overused. D. people are excluded from public goods.

C

The two most important goals for government policy involve a​ trade-off between​ __________ and​ __________. A. direct​ regulation; indirect regulation. B. taxation; government spending. C. equity; efficiency. D. big​ government; small government.

C

Which of the following statements are true regarding​ externalities? ​(Check all that apply​.) A. In the case of an​ externality, the free market will maximize social surplus. B. For computing efficient​ outcomes, economic agents adjust the demand curve to account for negative externalities. C. A negative externality occurs when an economic activity has a spillover cost to a bystander. D. Deadweight loss can be either a foregone benefit or the total cost of the externality to society.

C, D

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

D

An example of a regressive tax is the​ ___________. A. inheritance tax. B. income tax. C. Medicare tax. D.Social Security tax

D

An outcome is Pareto efficient if A. all individuals can be made better off without making someone worse off. B. sellers could do better at the expense of buyers. C. buyers could do better at the expense of sellers. D. no individual can be made better off without making someone else worse off.

D

FDA regulations aimed at ensuring that new drugs that are marketed​ do, in​ fact, have the functions they are supposed to have are necessary​ because: A. quantity regulations are so rare within a market economy. B. verification is an easy task within a market economy. C. quantity regulations are so efficient. D. verification by each consumer would be extremely inefficient.

D

How do economic profits and losses allocate resources in an​ economy? A. When an​ industry's goods​ (or services) become more highly valued by​ society, positive economic profits emerge for firms in the​ industry, attracting new firms and their resources to that industry. B. Businesses always seek to improve their profits and in so​ doing, they move resources into the production of goods and services that society values the highest. C. When an​ industry's goods​ (or services) become less highly valued by​ society, firms in the industry suffer losses and thus become motivated to put their resources to more profitable uses elsewhere. D. All of the above.

D

In a command​ economy, a planning agency sets prices for various inputs and final goods. In a market​ economy, supply and demand decide the prices of various goods. In both​ cases, there is a set of prices operating in the economy. Then why are market economies considered more efficient than planned​ economies? A. The price mechanism utilized by market economies reflects all that is collectively known and thus ensures that economic agents make trades that are in their best interest and maximize social surplus. B. The prices set by central planners reflect their very incomplete knowledge regarding the multitude of factors that determine the interests and decisions of economic agents. C. The prices set by central planners tend to be​ inflexible, responding to changing conditions only when planners recognize that circumstances are changing and then figure out the significance of the underlying change. D. All of the above.

D

In a perfectly competitive​ market, a firm with multiple production plants will minimize total costs of production when A. closing older plants with less advanced production technologies. B. the cost of production for all plants is equal. C. each plant produces at maximum capacity. D. each plant produces where marginal revenue equals marginal cost.

D

Which of the following is not likely to be subject to the tragedy of the​ commons? A. Donuts brought to the office. B. Coral reefs. C. A public area for grazing cattle. D. National defense.

D

Which of the following is the outcome of bargaining when Jones and Smith can bargain at zero​ cost? A. Jones gives​ $350 to Smith and continues to listen to music on speakers. B. Smith starts listening to music on his speakers at a higher volume so as to cause disturbance to Jones. As a​ result, both of them suffer the damages worth more than​ $350. C. A private deal between Jones and Smith cannot be struck as headphones are not free. D. Smith gives​ $50 to​ Jones, and Jones agrees to listen to music using his headphones.

D

Why is the market demand curve for public goods calculated as a vertical summation of individual demand​ curves? A. because public goods are the opposite of private​ goods, therefore the summing must be done similar to club goods. B. because public goods require vertical summation to account for the higher level of fairness compared to private goods. C. because public goods are finite in availability of​ consumption, so the vertical summation accounts for the limit. D. because the public good is​ non-rival, so you and others can consume every unit of the good at the same time.

D

The price at which a buyer is indifferent between making a purchase and not doing so is known as her ​____________. A. reservation price. B. breakeven point. C. willingness-to-pay value. D. all of the above. E. A and C only.

E

Jones and Smith share the same cubical in the office. Jones loves to listen to music on his speakers while working. Smith is not able to concentrate on his work in the presence of music. Jones receives benefits worth​ $200 regardless of whether he listens to music on his speakers or headphones. The cost of headphones is​ $50. Smith is not able to concentrate on his work and suffers damages worth​ $350 when Jones listens to music without his headphones. Smith does not suffer any damages when Jones listens to music on his headphones. Suppose the office does not have any rules against listening to music on speakers while working. In this​ case, if Jones and Smith do not​ communicate, the market outcome is that______________. This market outcome is _________.

Jones continues to listen to music on his speakers; therefore, Smith is not able to concentrate on his work; socially inefficient

Consider the figure on the right. The blue line shows how many units of goods A and B a worker in Taiwan can​ produce, and the tan line shows the number of units of goods A and B that a worker in Korea can produce. Does this figure indicate anything about either worker having a comparative or absolute advantage in either​ good? According to the​ figure, _____ has an absolute advantage in the production of good A and _______ has an absolute advantage in the production of good B. Considering comparative​ advantage, ______ has a comparative advantage in the production of good A and ________ has a comparative advantage in the production of good B.

Korea; Korea; Taiwan; Korea

When tax rates​ increase, the deadweight loss of taxation increases by _____________. This implies​ that, all else being​ equal, it is better to have _____________ rather than ____________.

a greater amount; many small tax sources; one large tax source

Is it true that a country needs to have an absolute advantage in the production of a good in order to benefit from trade in that​ good? Countries that do not have an absolute advantage in the production of a good ______ benefit from trade.

can

You decide to respond to the​ neighbor's complaints by limiting the number of hogs that Dwight can have on his farm. This is an example of using a ______________.

command-and-control approach

A linear PPC would show _______________ and a PPC that is curved away from the origin would show ______________ .

constant opportunity costs; increasing opportunity costs

Consider the market illustrated in the figure on the​ right, where demand is perfectly inelastic. If the government levies a tax on​ consumers, what will be the tax​ incidence?

consumer will bear 100 percent of tax burden

For an exporter under free​ trade, consumer surplus will ______ compared to that in the absence of free trade.

decrease

a deadweight loss is the ________ in social surplus that results from a market _________

decrease; distortion

When economists speak of a deadweight​ loss, they are referring to a _______ in ______ caused by a market distortion.

decrease; social surplus

One reason economists in general ______ favor protectionism is because it ________ prices for consumers and _________ social surplus.

do not; raises; lowers

Suppose the fee were raised to ​$110. In this​ case, the social surplus will ____________ and the deadweight loss will be ​_____.

fall to zero; $90

For an exporter under free​ trade, producer surplus will _______ compared to that in the absence of free trade.

increase

With the​ tariff, what happens to the quantity supplied by domestic​ producers? With the​ tariff, the quantity supplied by domestic producers ___________. With the​ tariff, what happens to the quantity demanded by domestic​ consumers? With the​ tariff, the quantity demanded by domestic consumers ____________. With the​ tariff, what is the impact on domestic​ producers, foreign​ producers, and domestic​ consumers? A. Domestic producers and domestic consumers win. Foreign producers lose. B. Foreign producers and domestic consumers win. Domestic producers lose. C. Domestic producers win. Domestic consumers and foreign producers lose. D. Domestic and foreign producers win. Dome

increase; decreases; C

When Jones and Smith can bargain at zero​ cost, the new rule of the office has _____ impact on achieving the economically efficient outcome.

no

How do public goods differ from common pool​ resources? Explain. Public goods are _______ ​goods, while common pool resource goods are _____ goods.

non-rival; rival

You have just been appointed as the County Commissioner of Hazard County. Your first day on the job you have the following​ conversations: Ludwig mentions that​ Frank, the local​ rancher, is inflating land prices by buying too much land. This is an example of a _____________. George mentions that Ms. Daisy has planted some lovely new roses in front of her store. This is an example of a ______________. Lauren mentions that it is extremely windy today. This is an example of _______________. Jeb mentions that the hog farm down the road from his house is creating a very nasty smell. This is an example of a _______________.

pecuniary externality; positive externality; not an externality; negative externality

In an​ economy, the government sets a price control for a good. The suppliers notice that due to this price​ control, the consumers buy less of their good causing their inventories to rise. This price control set by the government is known as _________.

price floor

lump-sum income tax is

regressive tax

Suppose the condo association imposes a tax of ​$40 ​(i.e., a​ tax) for each item left in the condo during the​ move-in/move-out. Given the​ information, the social surplus after the imposition of the tax will ________________.

remain unchanged

A​ three-person city is considering a fireworks display. Anne is willing to pay​ $50 to see the​ fireworks, Bob is willing to pay​ $15, and Charlie is willing to pay​ $15. The cost of the fireworks is​ $60. In terms of​ efficiency, the fireworks display ______ be offered. _________ will provide the display on his or her own. Suppose the town decides to put the matter to a vote. If at least two people vote in favor of the fireworks​ display, each person will be taxed​ $40 and the fireworks display will be held. _________ will vote in favor of the display.

should; No one citizen; One person

all else being equal, the flatter the supply curve, the ___________ the social surplus in the market

smaller

There is ________ a​ trade-off between equality and social surplus.

sometimes

Black markets often ________ the ban on illegal goods and services. Another facet of underground​ economies, tax​ evasion, _______ legitimate businesses and can result in governments levying ________. taxes.

undermine; harms; higher