Econ

You are interested in playing a card game. The rules of the game are such that you pick a card from a deck of cards and if the card is a​ diamond, you win ​$4040. The catch​ is, every time you want to pick a card you have to pay the dealer a fee of ​$44. A standard deck of cards consists of 52​ cards, with 13 diamonds in the deck of cards. The probability of picking a diamond is​ ___________ and the probability of not picking a diamond is​ ___________.

1/4, 3/4

Name the correct factor associated with government taxation and spending decisions from the given scenarios:Government increases taxes as a result of a budget deficit.

Correcting market failures and externalities

Name the correct factor associated with government taxation and spending decisions from the given scenarios:Government increases taxes in order to pay the salary of the doctors working in government owned hospitals.

Financing operations.

Is the entire burden of the tax always borne by those on whom it is​ imposed?

Not​ necessarily, since the burden of the tax depends on price elasticity.

Name the correct factor associated with government taxation and spending decisions from the given scenarios:Government issues bonds for the construction of a new plant that treats the waste products emitted from the big factories.

Raising revenues.

Name the correct factor associated with government taxation and spending decisions from the given scenarios: Government provides health services to individuals who are incapable of paying for it.

Redistributing funds via transfer payments.

Based on the given information in the table​ below, identify the category of risk preference:Kat prefers an investment with a guaranteed rate of return of 10 percent over an investment that has a 50-50 chance of 20 percent and 0 percent returns.

Risk aversion

Based on the given information in the table​ below, identify the category of risk preference: Kyra is indifferent between an investment with a 50-50 chance of 30 percent and 0 percent returns and an investment with a guaranteed rate of return of 15 percent.

Risk neutrality

Based on the given information in the table​ below, identify the category of risk preference: Diana prefers the investment with a 50-50 chance of 40 percent and 0 percent returns over an investment that has a guaranteed rate of return of 20 percent.

Risk seeking

The idea of leaving all the money in an account and earning interest not only on the original deposit but also on the past interest earned is called​ ____________. Part 5

compounding

The incidence of the tax falls entirely on producers because​ ____________.

consumers are infinitely price sensitive.

Consumer sovereignty suggests that​

government should not interfere with consumer choices.

This process implies that future rewards are worth MORE OR LESS than current rewards.

less

To value the delayed​ benefits, economists weight the reward by​

multiplying the reward by a positive factor that is less than 1.

Paternalism is the view that​

people do not always know what is best for​ them, and government should encourage them to make the right choices.

Economists have done numerous studies on how much risk people willing to take in a variety of situations. They have found that in most situations people overall are​ ____.

risk averse

The fact that most extended warranties that are offered on smaller electronic purchases tend to cost more than the benefits they provide it is likely true that firms​ ____.

sell many extended warranties since people are willing to pay extra to avoid the risk of a loss

The tax paid while purchasing a cocktail at a bar is levied by

the federal government.

ABC​ Ltd., is an international company that pays taxes every year on its profits. This particular tax is levied by

the federal, state, and/or local governments.

An outcome is described to be risky when​

the outcome of either a good or bad event is not known in advance.

Dereck sold his shop to Jazz who wants to open a new salon. Dereck had to pay taxes on the sale of his shop. This tax is levied by

the state and local governments.

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:

verification by each consumer would be extremely inefficient.

Tax incidence refers to​ ____________.

who bears the burden of a tax.

One cost associated with higher income taxes is that people might choose to work less. The empirical studies reveal various estimates of labor supply elasticities. Can you think of another empirical approach to estimate labor supply​ elasticities? ​(Hint​: Be sure to have exogenous variation so that you can make a causal​ statement.) When comparing elasticities of labor supply for jobs with various barriers to entry​ (such as certifications or degree​ requirements), you would expect to find a more​ _______ labor supply for jobs with more entry​ barriers, since those who get through the barriers will be​ _______ to employers.

​inelastic; more valuable