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