Econ 2000 HW 5

places a price on the right to pollute.

A corrective tax Select one: a.places a price on the right to pollute. b.assigns a legal pollution limit for firms. c.costs society more than pollution regulations. d.causes each factory to reduce pollution by the same amount

he is providing a good that is not rival and not excludable.

A sidewalk runs across Jermichael's front yard near the street. By law, anyone has the right to use the sidewalk. When Jermichael shovels the sidewalk after a heavy snowstorm, Select one: a.he is providing a good that is not rival and not excludable. b.he is a free rider. c.those who walk on the sidewalk are using a club good. d.he is providing a good that is excludable. Feedback

asking individuals to voluntarily reduce their use of the resource.

Each of the following is likely to be a successful way for the government to solve the problem of overuse of a common resource except Select one: a.selling the common resource to a private entity. b.regulating the use or consumption of the common resource. c.taxing the use or consumption of the common resource. d.asking individuals to voluntarily reduce their use of the resource.

the social value of education exceeds the private value of education.

Education is heavily subsidized through public schools and government scholarships. This subsidization of education reflects the fact that Select one: a.the social value of education exceeds the private value of education. b.the social cost of education exceeds the private cost of education. c.the market-equilibrium quantity of education exceeds the optimal quantity of education. d.a negative externality requires a subsidy to move the market equilibrium closer to the social optimum.

$2000

Figure 10-13. On the graph, Q represents the quantity of plastics and P represents the price of plastics. Refer to Figure 10-13. If the government imposed a corrective tax that successfully moved the market from the market equilibrium to the social optimum, then tax revenue for the government would amount to Select one: a.$2,000. b.$1,250. c.$1,600. d.$2,500.

All of the above are correct.

Flu shots provide a positive externality. Suppose that the market for vaccinations is perfectly competitive. Without government intervention in the vaccination market, which of the following statements is correct? Select one: a.The current output level is inefficiently low. b.At the current output level, the marginal social benefit exceeds the marginal private benefit. c.All of the above are correct. d.A per-shot subsidy could turn an inefficient situation into an efficient one.

a corrective tax, but not by regulation.

If the goal of public policy is to allocate pollution to those factories that face the highest cost of reducing it, then that goal could be achieved by Select one: a.a corrective tax, but not by regulation. b.neither regulation nor a corrective tax. c.either regulation or a corrective tax. d.regulation, but not by a corrective tax.

a.120 units, since the value to the buyer of the 120th unit is equal to the cost incurred by society of the 120th unit.

In the market depicted in the graph above, the socially optimal quantity of output is Select one: a.120 units, since the value to the buyer of the 120th unit is equal to the cost incurred by society of the 120th unit. b.160 units, since the value to the buyer of the 160th unit is equal to the cost incurred by society of the 160th unit. c.120 units, since the value to the buyer of the 120th unit is equal to the cost incurred by the seller of the 120th unit. d.160 units, since the value to the buyer of the 160th unit is equal to the cost incurred by the seller of the 160th unit.

$6,000 and 20 percent, respectively

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $50,000? Select one: a.$6,000 and 20 percent, respectively b.12 percent and 20 percent, respectively c.12 percent and $50,000, respectively d.$6,000 and 12 percent, respectively

21.7 percent

Suppose the government imposes a tax of 20 percent on the first $50,000 of income and 30 percent on all income above $50,000. What is the average tax rate when income is $60,000? Select one: a.25.0 percent b.21.7 percent c.46.7 percent d.50.0 percent

over time, the aquifer is likely to be overused.

The Ogallala aquifer is a large underground pool of fresh water under several western states in the United States. Any farmer with land above the aquifer can at present pump water out of it. We might expect that Select one: a.each farmer has a sufficient incentive to conserve the water. b.over time, the aquifer is likely to be overused. c.resources would be used more efficiently if the government paid for the pumps farmers use to get the water. d.state governments have an incentive to insure that their farmers do not overuse the water.

Bruce owns Buster, a large dog who barks whenever anyone walks near his house. Betty lives next to Bruce, and Buster's barking can be heard whenever anyone walks near her house, too. Thus, Betty receives free protection from burglars because of Buster's barking.

Which of the following is an example of the free-rider problem? Select one: a.Sam purchases a burger at a fast food restaurant and gets a second burger free because the restaurant is having a buy one, get one free sale. b.Both Zoe and Zach receive low-cost dental care at the local dental school, so neither of them pays the full cost of the care. c.Bruce owns Buster, a large dog who barks whenever anyone walks near his house. Betty lives next to Bruce, and Buster's barking can be heard whenever anyone walks near her house, too. Thus, Betty receives free protection from burglars because of Buster's barking. d.Alfred receives a free lunch from the local "Meals on Wheels" program because of his low monthly income. Yet his next door neighbor, Alice, is not eligible for the free lunch.