AP Microeconomics
This piece of antitrust legislation specifically prohibited mergers that lessened competition...
Clayton Antitrust Act
The "ability to pay" principle of taxation is exemplified by using a regressive tax system.
False
What must be true for allocative and productive efficiencies to be met?
MSB = MSC and P = min ATC
Suppose the consumption of a good creates positive externalities. What would be the result of the government levying a tax on the consumption of this good?
The quantity sold in the market would decrease and the market would move further away from allocative efficiency.
Which of the following is not an example of a public good?
a bag of chips
When marginal social benefit is greater than marginal social cost at the quantity being produced and consumed in the market,
a positive externality exists and the government could enact a subsidy to remedy the externality.
A progressive tax is
a tax that increases as one's income increases.
Which of the following would be an example of a natural monopoly?
a water company
When price is set equal to ATC, it is called
fair return pricing
Which term is used to describe an individual that receives the benefit of a good without incurring any cost for the consumption of the good?
free rider
Which of the following is a market failure that results when parties to a transaction have access to different information?
imperfect information
After instituting a progressive tax and using a portion of the tax revenue to pay out transfer payments, one would expect income distribution in a nation to
improve and move toward a more equitable distribution.
If the government used marginal cost pricing to regulate a natural monopoly,
it would result in the natural monopoly earning an economic loss and a need for a government subsidy.
Marginal private cost plus any external costs is called
marginal social cost
Which term refers to the inability of the market to allocate resources efficiently?
market failure
Goods that are non-excludable and non-rival
public goods
Which of the following is an example of a regressive tax?
sales tax
A merger between two companies that results in an HHI of 1,600 is likely to warrant further government review if
the HHI changed by more than 100 points.
When marginal social benefit is less than marginal social cost at the quantity currently produced and consumed, the market is producing
too much of the good.
The upper limit on the HHI is Correct answer:
10,000