ECON 211- Final

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Examples of direct regulation include​ ____________.

price ceilings, fishing quotas, antismoking laws

A legally determined minimum price that sellers must receive is known as a:

price floor

The federal income tax in the United States is a ______

progressive tax

To reduce inequality and poverty in an​ economy, the government uses a​ ___________.

progressive tax system to fund transfer payments.

Given that there are costs involved with government intervention in an​ economy, governments still choose to intervene in markets to​ ____________.

reduce poverty

The​ equity-efficiency trade-off states that when social inequality is​ high, further increases in inequality ______ social surplus. The flatter the​ equity-efficiency curve, the ________ the cost of reducing social inequality in terms of social surplus.

reduce, greater

Which of the following is not an example of​ paternalism?

repealing the Affordable Health Care Act

Which of the following corresponds to revenues at the state level of government?

revenues mainly redistributed from the Federal government, sales tax, and property tax

All of the following describe a monopoly market​ structure, except

seller is a price taker

Which of the following is not a result of​ corruption?

selling goods at a price that does not include tax

When the elasticity of demand for a product is __________ the elasticity of supply, consumers pay __________ of the tax on the product.

smaller than, more than half

The actual division of the tax burden between buyers and sellers is known as:

tax incidence

The government runs a budget surplus when​ ____________.

tax revenue exceeds its spending.

What is the definition of market power?

the ability of a firm to charge a price greater than marginal cost

Tax incidence refers to ______.

the actual division of the tax between buyers and sellers in a market

Which of the following rights is given to the holder of a patent?

the exclusive right to a new product

Which of the following is the marginal tax rate?

the fraction of each additional dollar of income that must be paid in taxes

If the last dollar of income earned by individuals with the highest incomes is taxed at a rate that is less than the average tax rate, which of the following is correct?

the income tax is a regressive income tax

How is the U.S. federal income tax structured?

the rate at which income is taxed increases as income increases

Which is the following is the average tax rate?

the total tax paid divided by total income

Which of the following is the average tax rate?

the total tax paid divided by total income

What happens when network externalities are present?

the usefulness of a product increases with the number of consumers who use it

Which of these best represents a tax equal to the value of the negative externality?

the vertical distance between S1 and S2

If the implementation of a price control results in a deadweight​ loss, which of the following statements is​ true?

there is excess demand

A government would want to be on this curve where​ ___________.

there is no correct answer to this​ question, as the answer depends on a​ government's value judgments.

Which of the following functions is beyond the scope of economics as far as government intervention is​ considered?

to make a value judgment on whether government is good or bad

Governments deal with natural monopolies by:

using regulation to protect consumers

In which of the following situations can a firm be considered a monopoly?

when a firm can ignore the actions of all other firms

Tax incidence refers to​ ____________.

who bears the burden of a tax.

In the long run, the monopolist can earn:

zero or positive economic profit

Government spending in the United States has grown over time and now accounts for more than 40 percent of U.S. national income. Does this mean that the government has been consistently running a budget​ deficit?

​No, government deficits depend upon spending and tax revenue.

The monopolist charges a price that is __________ the perfectly competitive industry.

higher than

Black markets may arise if:

price ceilings exist

A patent gives its holder the exclusive right to a product for a period of __________ from the date the patent is filed with the government.

20 years

Which of the following is an example of the opportunity cost of government​ bureaucracies?

A tax collector who was qualified to produce motherboards

What does a deadweight loss from a tax consist of?

Buyers who must leave the market because they can't afford to pay the higher price and sellers who must leave the market because they can't produce at a lower price.

Price discrimination is the practice of:

Dividing consumers into two or more groups and charging different prices to each group

All of the following statements about the​ monopolist's demand curve are​ true, except:

If the price effect​ dominates, lowering price increases revenue.

Why is city drinking water better off as a natural​ monopoly?

Industries like city drinking water experience economies of scale since they have high fixed costs.​ Thus, it is cheaper to have a single firm provide a larger quantity.

How would you depict the​ trade-off between equity and efficiency on a​ graph?

Inequality on one axis and social surplus on the other with a​ positively-sloped function.

Which of the following is the largest source of revenue for state​ governments?

Miscellaneous taxes and​ fees, such as tolls on roads and public transportation tickets.

How does a natural monopoly differ from a firm that becomes a monopoly due to network​ effects?

Natural monopolies result from economies of​ scale, while network effects come from the benefits to consumers from having many people use a service.

Many people have argued that an income tax should be​ "marriage neutral," that​ is, two people should pay the same total tax whether they are married or they are single. Suppose Amanda earns​ nothing, Ben earns​ $60,000, and Cathy and Dylan each earn​ $30,000. They are all single. Amanda pays no tax because she has no income. If they all live in a country that has a progressive income​ tax, which will be​ higher: the tax that Ben pays or the sum of the taxes Cathy and Dylan​ pay?

The tax that Ben pays because​ high-income individuals pay higher income taxes.

Which of the following statements explains the​ trade-off between equity and​ efficiency?

The​ equity-efficiency trade-off represents the balance between ensuring an equitable allocation of resources​ (equity) and increasing social surplus or total output​ (efficiency).

Which of the following is a factor underlying government taxation and spending​ decisions?

To raise revenues to pay for operations.

A black market is​ ____________.

a nonlegal market for regulated goods and services

Which of the following does a income tax rate refer to?

a percentage of income

A monopoly is a market structure that is characterized by:

a single seller of a good or service that does not have a close substitute

In an​ economy, if the government implements a law for individuals that requires them to save at least​ 25% of their annual income in a social savings plan framed by the government. For supporting this​ plan, the government raises revenues by implementing income tax rates that are higher compared to the other countries. Which of the following will be a​ result(s) of this​ scenario?

an increase in the deadweight losses and an increase in costs to the government

Laws aimed at promoting competition among firms are known as:

antitrust laws

Natural monopoly happens when the:

average total cost curve is decreasing

A significant difference between monopolies and competitive firms is that:

a​ monopoly's demand curve is the​ industry's demand​ curve, while the competitive​ firm's demand curve is perfectly elastic.

When network externalities are present, it may create a:

barrier to entry for competing technologies due to high switching costs

Which of the following terms corresponds to a market where buying and selling take place at prices that violate government price regulations?

black market

If the federal government's expenditures are less than its revenue, there is a ______.

budget surplus

Which of the following is a cost associated with government intervention in an economic​ system?

bureaucracies

A monopolist should continue to increase production until marginal:

cost is equal to marginal revenue.

Which of the following are examples of inefficiencies created by government​ intervention?

creating a large workforce of professionals who review whether the financial reports of companies are true and fair -and- quality deterioration in a market after government implements a price control

Direct regulation is​ ____________.

direct actions by the government to control the amount of an activity

Monopolists do not use a supply curve because of they:

do not vary production based on market price.

The only legal restriction concerning price discrimination is that firms cannot use it to:

drive rivals out of business

What types of goods are likely to be traded in a black​ market?

drug dealing and prostitution

The downward sloping part of the long run average total cost curve is where the firm is achieving:

economies of scale

Economies with lower taxes _______ production and _______ available social surplus. One possible cost of such economies is that the gap between the rich and poor may _______.

encourage, increase, increase

Which of the following statements about U.S. government revenues is correct?

federal revenues have ranged between 25 and 30 percent of GDP for a long time

Consumer sovereignty suggests that​ ____________.

government should not interfere with consumer choices.

Which of the following is a problem that black markets pose in an​ economy?

governments use resources to enforce the law

When tax rates​ increase, the deadweight loss of taxation increases by ________. This implies​ that, all else being​ equal, it is better to have _______ rather than _______

greater amount many small tax sources one large tax source

If a monopoly selling 300 computers at $3000 decides to lower its price to ​$2000 in order to sell 100 more​ computers, then the firm:

has negative marginal revenue

The monopolist charges a price that is __________ the perfectly competitive industry

higher than

In competitive​ markets, tax​ incidence, as well as the​ equilibrium, is independent of whether the tax is imposed on consumers or sellers​ because:

if it is imposed on the​ seller, the seller will raise the price and pass it to the consumer.

Which of these statements about the effect of taxes and transfers on income distribution is correct?

income after taxes is more equally distributed than income before taxes

A progressive tax system is one in which tax rates ________ as taxable base income increases. In a regressive tax​ system, higher earners pay ______ marginal tax rates.

increase, lower

Which of the following is not a consequence of high levels of​ taxation?

increased immigation of foreign high earners

Network externalities and economies of scale both can contribute to the formation of a monopoly.​ However, they differ in that network externalities deal with:

increasing benefits and economies of scale deal with decreasing costs

__________ represent the largest portion of the money the U.S. government collects in tax revenues. ______ tax receipts represent a third of the federal​ government's tax revenue and are taxes on ______

individual income taxes, social insurance, and wages

The largest source of revenue for the federal government is​ ___________.

individual income taxes.

Economists toward the paternalistic end of the spectrum would probably say that some mistakes result from the fact​ that:

individuals are not used to making decisions of a certain type

Which of the following arguments is not consistent with​ paternalism?

individuals make choices that reflect their true preferences and know what is best for them

Educational grants afforded to poorer developing countries are​ often:

ineffective because government officials often misuse the funds.

For a​ monopolist, total revenue______ calculated the same way as in perfect​ competition; marginal revenue ______ equal to price.

is, is not

Why are there two different views on the effect of taxation on labor supply in the United​ States?

it depends on normative questions such as how much to tax or how much government intervention is necessary, the effect of a tax on labor supply depends on the elasticity of labor supply, and the effect of a tax on labor supply depends on the amount of deadweight loss created by the tax.

Examples of direct regulation include​ ____________.

laws restricting alcohol purchases, fishing quotas, and price ceilings

A monopolist will maximize profit at the level of output where:

marginal cost equals marginal revenue

In which of the following market structures is the firm's demand curve the same as the market demand for the product?

monopoly

Which of the following is an effect of a monopoly?

monopoly causes a reduction in consumer surplus

Which of the following statements regarding natural monopoly is true?

natural monopoly is most likely to occur in markets where fixed costs are large relative to variable costs

A tax is efficient if it imposes ________

no deadweight loss

A monopoly has _____ and _____. Price is set _______ marginal cost.

one seller and many buyers, greater than

Which of the following statements is correct about the U.S. tax system?

payroll taxes include social security and medicare taxes

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.


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