Unit 4 econ

A government has decided to phase out its antipoverty program support payments more slowly to help the near-poor become self-sufficient. One criticism about this policy is likely to be that this antipoverty program costs the government more money. that the near-poor will not be required to pay back benefits. that the near-poor may still lack skills for menial jobs. that antipoverty programs shift wealth from the rich to the poor.

a

An economist is more likely to identify __________________ as a more efficient and flexible way for society to __________________________ . marketable permits; allow a limited, declining amount of pollution to occur better defined property rights; to address issues of allowable levels of pollution market-oriented environmental tools; enforce strict limits on emissions better defined property rights; to shrink pollution levels over time

a

Ideally, a patent should cover a long enough period of time for the inventor to _______________, but that period should not be so long that it allows the inventor to _____________________________. earn a hearty return; charge a high monopoly price permanently contribute to the social interest; only receive a slice of the social benefits earn a rate of return; prevent broad public access to classic works contribute to the social interest; prevent broad public access to inventions

a

If a glass manufacturer has only a few ________________ of reducing pollutants, it will ____________________ . costly ways; end up paying the pollution tax. inexpensive ways; incur the pollution tax instead. costly ways; do so to minimize its pollution taxes. inexpensive ways; buy the most expensive technology.

a

If a small electric automobile manufacturer is able to gain the social return generated by its electric motor, its demand for financial capital would shift to the left. shift to the right. decrease substantially. increase slightly.

a

If an alternative policy could encourage both _____________________, instead of ________________________, consumers would benefit. invention and competition; invention and monopoly invention and monopoly; invention and public funding invention and monopoly; invention and competition invention and competition; invention and public funding

a

Market competition may sometimes encourage a firm to innovate out of fear because of the perception that they will inevitably fall behind other competitors seeking out innovations. the firm will only have a very temporary edge over its competitors. the ability to earn above-normal profits is also available to its competition. higher profits can only be earned by finding less expensive ways to produce.

a

When a firm invests in new technology, the ________________ that the firm receives are _____________________________ . private benefits; only a portion of the overall social benefits social benefits; only a portion of the overall private benefits private benefits; about three-quarters of the economic benefits social benefits; about one-third of the overall private benefits

a

Which of the following represents one of the methods that the government uses to promote technology? protection of intellectual property provision of a greater number of public goods maintenance of stable regulated financial markets creation of public colleges and universities

a

Which of the following would an economist identify as a difficulty relating to environmental command-control regulations? high degree of inflexibility clear distinctions drawn between firms lack of incentive to reduce pollution obvious lack of loopholes

a

While the traditional approach of U.S. government policies for environmental protection has had some level of success, some economists are proposing a change to a range of more flexible, market-oriented pollution control policies. a range of polices stipulating set limits governing pollutant emissions. stringent polices balance industry profit goals and environmental quality. stringent polices that will return the environment to its former pristine quality.

a

_______________ include both the private costs incurred by firms and also costs incurred by third parties outside the production process. Social costs Private costs Market costs External costs

a

A beekeeper decides to locate her business on a plot of land that is between an apple orchard and an elementary school. A negative externality that can result is the cost of the bee hives to the beekeeper. the possibility of the bees stinging the students at the school. the bees helping to pollinate the orchard, leading to more fruit. the honey the bees produce.

b

A method often used by economists to look at distribution of income in a society's economy involves programs for wealth redistribution. quintiles, or dividing a whole group into fifths. imposing taxes to redistribute wealth. quads, or dividing a whole group into fourths.

b

A public good is a good that is ____________________ , and thus is difficult for market producers to sell to individual consumers. excludable or rivalrous nonexcludable and nonrivalrous excludable and rivalrous unexcludable or unrivaled

b

Bringing the nations of the world to act together in addressing environmental issues that spill over national borders requires _______________ between countries with _________________ . a different approach to negotiations; similar income levels and sets of priorities a difficult set of negotiations; different income levels and sets of priorities a different approach to negotiations; low and middle-income levels. deliberate negotiations; high-income levels and similar sets of priorities.

b

Bruce is a single father with 1 child. He can work as a bagger at the local grocery store for $6 per hour up to 1,200 hours per year. He is eligible for welfare, and if he does not earn any income, he will receive $15,000 a year. If Bruce works, the government policy is to deduct 60 cents from his welfare stipend for every $1 that he earns in income. With this policy in place, if Bruce works 600 hours, his income will be $3,600 $16,440 $15,000 $12,840

b

Cathy can take either of two separate roads to drive to work. The first is a lightly used new toll road that is rarely congested. The second road is a local road with no tolls, but it is often congested and has many potholes. In this instance, the toll road is nonrivalrous and excludable rivalrous and nonexcludable nonrivalrous and nonexcludable rivalrous and excludable

b

One difficulty with direct government support of R&D is that it inevitably involves government decisions about ___________________. whether it can agree on the amount of social benefit conferred to private firms which of the vast number of proposed projects are worthwhile the location of the congressional district receiving the research funding. quantifying the social benefit conferred on a private firm by an R&D tax reduction.

b

Rather than arguing over whether the ultimate goal is zero pollution or a reasonable level of pollution, the immediate focus should be to tackle the environmental issues where the _____________________ and the __________________ . marginal benefits are least; marginal costs are greatest marginal benefits are greatest; marginal costs are least environmental benefits are greatest; social costs are least social costs are greatest; environmental benefits are least

b

The main categories of market-oriented approaches to pollution control are redefined property rights; pollution permits; marketable charges. marketable permits; better-defined property rights; pollution charges. pollution charges; extended property rights; marketable permits. pollution permits; defined property rights; marketable charges.

b

The term ____________ refers to a market exchange that affects a third party who is outside or external to the exchange. social costs spillover market failure private costs

b

To address a common poverty trap problem for many low-paid Americans whose jobs pay enough that a family could lose its eligibility for____________ , yet those jobs don't offer ______________________ either, some states guaranteed that children would not loose their coverage if their parents worked. food stamps; retirement benefits Medicaid; health insurance benefits Medicaid; drug insurance benefits food stamps; Medicaid benefits

b

Which of the following is the most appropriate response of public policy to a negative externality like pollution? modernize, update, and restore homes in run down neighborhoods to decrease littering find ways to account for the social costs of the negative externality in economic decisions encourage high standards of public education to increase innovation capability of youth assist the private party creating the negative externality to receive more social benefits

b

Which of the following is used to describe the full spectrum of animal and plant genetic material? ecodiversity biodiversity envirodiversity duodiversity

b

A Lorenz curve refers to a graphic illustration of the share of population on the _______________ and the cumulative percentage of total income received on the __________________ . left quintile; right quintile right quintile; left quintile horizontal axis; vertical axis vertical axis; horizontal axis

c

A complementary approach to supporting R&D that does not involve the government's close scrutiny of particular R&D projects is to give firms a permanent monopoly over all their inventions that never expires. the option to fund all R&D projects through colleges or universities. a reduction in corporate taxes based on amount of R&D performed. assurance that antitrust authorities challenge cooperative R&D efforts.

c

Both Wisconsin and Illinois border Lake Michigan. The lake is becoming polluted and both states are deciding whether or not to clean it. If Wisconsin decides to clean the lake it will cost 1200 and generate social benefits of 1500 - however, Wisconsin will receive only 1100 of those social benefits while neighbor Illinois will receive the other 400. If Illinois cleans the lake, it will cost them 700 and generate social benefits of 900 - however, Illinois will receive only 600 of those benefits, Wisconsin will receive the remaining 300. If a state does not clean the lake, it experiences a cost of $0. If Wisconsin does not clean the lake and Illinois does then the payoffs will be Wisconsin gains 200, Illinois gains 100 Wisconsin gains 200, Illinois loses 100 Wisconsin gains 300, Illinois loses 100 Wisconsin gains 300, Illinois gains 100

c

I'mAComputerCo. would likely be more willing to undertake an innovative research project to reduce the amount of electricity required to run its computers if there were some form of guarantee that if it succeeded, it will enjoy a small temporary advantage over the competition. it would be able to set price to compensate for development costs. it could sell the new computers as a monopoly for at least a few years. it would receive a government bailout if losses could drive it out of business.

c

If a rise in incomes is the same proportion for both low-income and high-income workers, then poverty will rise and inequality will remain unchanged. then poverty will rise and inequality will rise. then poverty will fall and inequality will remain unchanged. then poverty will fall and inequality will fall.

c

In the U.S., the command-and-control environmental laws of the early 1970s, together with the ensuing amendments and updates that have been made to them over time, were necessary as US industries had zero incentive to control pollution. were an inexpensive incentive for industrial polluters to improve performance. are given considerable credit for cleaner air and water in recent decades. draws distinctions between the needs of firms and costly equipment upgrades.

c

In the framework of a Lorenz curve, the final entry in the cumulative income column needs to be _________. total income cumulative income 100% 45%

c

Market failure describes a situation in which the market itself ______________________ in a way that balances social costs and benefits. remains outside the transaction incurs the costs outside the production process fails to allocate resources efficiently avoids externalities

c

Market-oriented environmental tools _______________ for firms to take the social costs of pollution into account and ____________________ in reacting to these incentives. draw distinctions; lower the social costs incurred lack incentives; prohibit firms from having flexibility create incentives; allow firms some flexibility specify particular technology; lower the social costs incurred

c

On average, it can cost _____________ and take ___________ to discover a new drug, perform the necessary safety tests, and bring the drug to market. $500 million; five years $100 million; a year $800 million; more than a decade $300 million; less than a decade

c

The federal government funds __________ of the nation's basic research, much of which ____________________________. more than half; carried out by private firms less than half; conducted in the labs of private firms about half; conducted at colleges and universities more than half; conducted a government run facilities

c

When making decisions about what safety systems should be required in cars or airplanes, the ___________________ will only approve rules where the estimated cost per life saved is __________ or less. U.S. Senate; $5 million U.S. Congress; $2 million Environmental Protection Agency; $3 million Environmental Regulation Agency; $7 million

c

While the U.S. command-and-control environmental regulations initiated in the 1970s have been very effective at reducing pollution, some economists have difficulty with the legislation because it often requires different pollution-control technology for each polluter. it usually requires different standards for all current and potential polluters. it is full of fine print and exceptions, and costly for some firms to comply with. it is not subject to compromises in the political process and all of the above.

c

______________ allows the government to collect wealth for redistribution based on the amount of stored wealth that is being passed on in the form of an inheritance. An inheritance tax A redistribution tax An estate tax A death tax

c

Crystal is a single mother with 2 children. She can earn $10 per hour and can work up to 1,800 hours per year. However, if she does not earn any income at all, she will receive government benefits totaling $18,000 per year. For every $1 of income she earns, her level of government support is reduced by $1. Crystal's labor-leisure opportunity set has doubled is smaller with the government support program is not affected by the government support program is larger with the government support program

d

If a society decides to reduce the level of economic inequality, which of the following sets of tools can it use? a tax imposed on the value of inheritances redistribution from those with high incomes to those with low incomes trying to assure that a ladder of opportunity is widely available the three mains sets of tools it can use include all of the above

d

In circumstances dealing with poverty, the term ______________ means taking income from those with higher incomes and providing income to those with lower incomes. safety net estate tax minimum wage redistribution

d

In the U.S., poverty rates are relatively low for the elderly for the well-educated for the male-headed households for whites and all of the above

d

It is commonly understood that every invention has its own story of discovery and development. often involved a parade of characters and firms. has a unique story that develops over years or decades. often results in new technology and all of the above.

d

Paddy and Mick are the only two inhabitants of a small island off the coast of Ireland. They burn coal to keep their houses warm at night. However, this coal burning is harming the air quality on their island. Both Paddy and Mick could install air filters on their chimneys. These filters cost 50 each. Each filter provides a social benefit of 80, but those benefits are divided equally among Paddy and Mick. If both Paddy and Mick install the filters both will gain 10 both will gain 0 both will lose 30 both will gain 30

d

Property rights are the legal rights of ownership on which others are allowed to infringe by paying the property owner's pollution tax. able to enforce use of pollution-control technologies. able to specify allowable quantities of pollution. not allowed to infringe without paying compensation.

d

Suppose that the government implements a new policy that provides free skills training to all low-skilled workers, which makes them more productive and turns them into high-skilled workers. This will ______ the supply of low-skilled workers and ______ the supply of high-skilled workers. increase, decrease increase, increase decrease, decrease decrease, increase

d

The difference between playing a board game and a playing a video game is the elimination of free riders involvement of fewer rivals involvement of free riders technology of the video game

d

There seems to be little evidence that poor families experienced _______________ as a result of ____________ . a tax refund; having earned income a tax break; having earned income an increased standard of living; EIC a reduced standard of living; TANF

d

To be effective, U.S. command-and-control environmental regulation required social costs of industrial pollution to become unavoidable business costs. firms to take the social costs of pollution into account. firms to increase their costs by installing specified anti-pollution equipment. the EPA to oversee all environmental laws and all of the above.

d

Two rubber companies, Boing and Twang, are currently producing along, and polluting, the same river. Both companies are considering whether to install pollution filters on their factories. These filters cost $15 million each. If a filter is installed, there is a benefit of $20 million, but this benefit is divided equally between the two companies. In the absence of any government intervention or agreement between the firms, both firms will install filters Boing will install a filter, Twang will not Twang will install a filter, Boing will not neither firm will install a filter

d

When reference is made to the ____________, it means the specific amount of income needed for a basic standard of living. poverty trap income line income gap poverty line

d

Which of the following is an example of economic output that can injure the environment? gold mine discharging arsenic into a natural lake it's using for a tailings pond paper mill discharging raw chemical waste into a river excessive clear cutting of wood resources by logging companies radio-active waste leaking into a river, and all of the above

d

Which of the following would be classified as a positive externality? a surcharge for ambulance service is shifted to property taxes reselling outdated textbooks to under-funded public schools removing government education subsidies for public schools converting a derelict empty lot to a public vegetable garden

d

Which of the following would most likely be identified as being the ultimate goal of public policies that pertain to technology? to help inventors earn higher rates of return to help inventors earn reasonable returns to encourage a stream of inventions that monetarily benefit the inventor. to encourage a stream of invention that benefits the whole of society.

d

Why did inequality of household income increase in the United States in recent decades? growth of single-parent families at the top end of the income distribution higher-earner couples near the top end of the income distribution increase in earnings received by high-skilled labor relative to low-skilled labor demand for high-skilled labor at higher wages increased and b and c

d