Exam 3 Textbook Questions

12. Between 1959 and 2019, the poverty rate in the US has ranged between a A. Minimum of 16.8% in 1983 and a maximum of 24.2% In 1991. B. Minimum of 10.5% in 1983 and a maximum of 22.4% In 1959. C. Minimum of 14.8% in 2015 and a maximum of 20.7% in 2017. D. Minimum of 0% in 1962 and a maximum of 14.7% in 2018.

B

18. Suppose that both proposals are voted on as a package. In comparison to the outcome which would result from two separate votes on the proposals, _____ when the two proposals are voted on as a package. A. Total Social Surplus is larger B. Constituents in District 1 are better off C. Constituents in District w are worse off D. More than one of the above is correct

B

2. ______ were two of the central figures in the formulation of the ideas of Utilitarian Justice, which argues that total social welfare can be increased by income redistribution, so long as people have a finishing marginal utility for money. A. Karl Marx and Friedrich Engels B. Jeremy Bentham and John Stuart Mill C. Max Lorenz and Corrado Gino D. John Harsanyi and Robert Frank

B

2. ________ has been described as "an ill-governed kleptocracy in which corruption is not a happy side-effect of power, but the core of the system." A. Present day India B. Present day Russia C. The US during the 1980s D. Great Britain during the 1970s

B

20. The "Incidence of a Tax" refers to A. Which level of government is imposing the tax B. Who bears the burden of the tax in terms of decrease welfare C. The frequency with which an individual has to pay the tax D. Which individual is legally responsible for writing a check to pay the tax

B

7. _______ is a broad term which refers to a transfer of a good or service to someone which directly increases the amount of the item they are able to consume. A. A compensating differential B. Redistribution In-Kind C. Income Support D. Income taxation

B

9. Consider a per unit tax of $11.50 imposed on sellers. The incidence of this tax for buyers is illustrated by A. Area a B. Areas b+c C. Areas c+d D. Area e

B

9. _______ is defined as the flow of money earned by an individual during a period of time. A. Human Capitol B. Income C. Wealth D. the Lorenz Curve

B

A government policy that attempts to "Internalize an Externality" can be generally described as A. A policy which completely bans an activity that generates an externality. B. A policy which introduces a cost (or foregone gain) that would be realized by a decision maker who generates an externality. C. A policy which mandates the exact level of an activity that decision makers must engage in. D. None of the above

B

To maximize profit, this monopolist would A. Sell 325 units of output, each at a price of $7.90. B. Sell 325 units, each at $23.15. C. Sell 680 units, each at $12.00. D. Sell 1,050, each at $23.15. graph 3

B

When this monopolist maximizes profit, Deadweight loss is equal to A. Areas a+b B. Areas e+f C. Area g D. Zero graph 3

B

When this monopolist maximizes profit, total Consumers' Surplus is equal to A. Zero B. Areas a+b C. Areas a+b+c+d+e D. Areas c+d+e graph 3

B

Which of the following is an example of a "Pure Public Good"? A. A grilled chicken taco from Del Taco. B. National Defense C. A bus ride on MARTA D. More than one above answer is correct

B

10. "Tax A" is a $2.50 per unit tax imposed on buyers; "Tax B" is a $4.00 per unit tax imposed on sellers. We can infer that A. Deadweight-Loss would be larger under "Tax A" B. The quantity of trade would be identical under both taxes C. Consumers would prefer "Tax A" D. None of the above

C

10. Based on the World Bank's poverty threshold of income $1.90 per day, between 1981 and 2017 the global poverty rate A. Increased drastically B. Increased moderately C. Decreased slightly D. Decreased drastically

C

12. In an election between all three candidates, _____ would receive the most votes. A. Rae B. Sam C. Ty D. None of the above

C

13. as of 2012, government spending on welfare programs in the US was roughly A. $156 billion, about 1% of GDP. B. $302 billion, about 2% of GDP. C. $952 billion, about 6% of GDP. D. $2,476 billion, about 16% of GDP.

C

16. Suppose no vote trading occurs. In this case, A. Only Proposal 1 would be approved B. Only Proposal 2 would be approved C. Both proposals would be rejected D. Both proposals would be approved

C

17. Consider a country which imposes a negative income tax according to the formula: T = (I - 50,000)(.2). Under this tax, A. Someone earning $50,000 receives a $10,000 transfer payment from the government. B. Everyone has to pay exactly 20% of all income earned in taxes C. Someone earning %100,000 has to pay $10,000 in taxes D. Low income earners have to pay taxes, but high income earners receive transfer payments from the government

C

18. As of 2020, the poverty threshold in the US for a family of four was A. $1.90 per day B. 22.4% C. $26,246 per year D. $98,088 per year

C

3. Suppose the Lorenz Curve for the US in 2021 lies completely below the Lorenz Curve for Sweden in2021. This implies that A. Per capital incomes are higher in Sweden than in the USB. Per capital incomes are higher in the US than in Sweden C. Incomes are distributed more equally in Sweden than the US D. Incomes are distributed more equally in the US than Sweden

C

8. Imposing a per unit tax of $6.25 on buyers in this market would generate tax revenue of A. More than $75,000 but less than $96,875 B. Exactly $75,000 C. More than $50,000 but less than $75,000 D. Exactly $50,000

C

8. _______ states that the fairest distributions of income and consumption is the one realized when the government establishes and enforces a legal code which respects all voluntary economic interactions between individuals in a society. A. Rawlsian Justice B. Utilitarian Justice C. Libertarian Justice D. Labor Theory of Value

C

At the free market outcome there would be a Deadweight-Loss equal to A. Areas c+f B. Areas d+e+g C. Area c D. Area e graph 4

C

At the free market outcome without any gov't intervention, there would be Deadweight-Loss equal to A. Area c B. Area e C. Areas a+b D. Areas a+b+c+d graph 1

C

If this good were trade in a free market without any gov't intervention,____, although the Social Welfare Maximizing level of trade is _____. A. 680 units would be traded; 590 units. B. 590 units would be traded; 410 units. C. 410 units would be traded; 590 units. D. 0 units would be traded; 680 units. graph 1

C

If this good were traded in a free market without gov't intervention, _______, although the Social Welfare Maximizing level of trade is ______. A. 900 units would be traded; 1,365 units. B. 900 units would be traded; 1,680 units. C. 1,365 units would be traded; 900 units. D. 13,65 units would be traded; 1,680 units. graph 2

C

The efficient level of output for this good is ____ units. A. 325 B. 465 C. 680 D. 1,250 graph 3

C

Which of the following is not part of the Coasian Solution to the problem of externalities? A. Clearly and fully define property rights. B. Make individuals pay compensation if they infringe upon the property rights of others. C. Prevent parties from negotiating with one another regarding infringements of property rights caused by externalities. D. None of the above answers is correct; they are all part of the Coasian Solution.

C

1. Examining how Real Household Incomes have changed between 1969 and 2019, mean household income of the bottom 5th of all households _______ while the mean household income of the top 5th of all households _____ between these years. A. Decreased; decreased B. Decreased; increased C. Increased; decreased D. Increased; increased

D

11. In 1969, 12% of all US households had air conditioning. In contrast, by 1997, ____ of US households below the poverty line had air conditioning. A. 9% B. 14% C. 33% D. 70%

D

11. Which of the following is not one of the sources of government failure? A. Corruption or kleptocracy B. Regulatory capture C. Rent seeking D. Externalities

D

19. The Labor Theory of Value, which states that the value of a commodity depends upon only the amount of labor required to produce the commodity, is most closely associated with the ideas of A. Oscar Wilde B. Max Lorenz C. Million Friedman D. Karl Marx

D

20. Which of the following pieces of legislation was part of the War on Poverty? A. Economic Opportunity Act of 1964 B. Elementary and Secondary Education Act C. Social Security Act of 1965 D. More than one of the above

D

21. To be eligible to receive a means tested benefit, a recipient must A. Show that they are seeking employment and not using recreational drugs B. Be over a certain age C. Agreed with the Rawlsian Justice argument for redistribution D. Have income below a certain level

D

5. Charles' income is higher than Debbie's income. Two of the notable differences between their jobs are that Charles must work outside year round and he runs a greater rick of being injured. These observations would suggest that the difference in incomes between the two individuals is A. A consequence of Debbie being paid a below minimum wage B. Due to gender discrimination C. An indication of the Labor Theory of Value D. A compensating differential

D

A firm operating in a "Perfectly Competitive Market" has "No Market Power," which implies that the firm A. Would lose all its costumers if it attempted to increase price above the prevailing market price. B. Faces a "vertical demand curve" for its output. C. Does not have to decrease price in order to increase the quantity of output sold. D. More than one of the above is correct. graph 2

D

Based on this graph. It appears as if production and consumption of this good generates A. A positive externality(but no negative externality). B. A negative externality(but no positive externality). C. Neither a positive nor a negative externality D. Both a positive externality and a negative externality. graph 4

D

Based upon this graph, it appears as if A. The government is imposing a substantial per unit tax on this good. B. This good is clearly produced by a monopolist. C. Production/consumption of this good generates a negative externality D. Production/consumption of this good generates a positive externality graph 1

D

The free market level of trade is _____; the efficient level of trade is _______. A. 2,300 units; 4,075 units. B. 2,850 units; 2,300 units. C. 2,850 units; 3,360 units. D. 3,360 units; 2,850 units. graph 4

D

13. If the position were filled by first having a vote over all candidates, followed by a runoff between the two highest vote-getters, the eventual winner would be A. Rae B. Sam C. Ty D. None of the above

A

16. In June 2016, voters in Switzerland considered, but rejected, a proposal which would have A. Paid all adults a guaranteed minimum income of roughly $30,924 per year. B. Made it illegal to be unemployed C. Mandated that all workers in the country earn the exact same income D. Taxed all future inheritances a rate of 100%

A

21. The "Economic Calculation Problem" posits that A. A system of planning can never achieve efficient outcomes B. In order for economic outcomes to be fair, it is necessary to redistribute wealth through a highly progressive tax structure C. Calculating the true economic value of a worker can only be done under a socialist system D. It is impossible to come up with any estimate of the costs of complying with government bureaucracy

A

4. _________ wrote A Theory of Justice (1971) in which he argued that a social contract designed behind a veil of ignorance would aim to maximize the well-being of the worst-off member of society. A. John Rawls B. Karl Marx C. Max Lorenz D. Robert Nozick

A

6. According to the world Bank's World Governance Indicators Project, the perceived level of corruption is lowest in ______ and highest in _______. A. New Zealand; South Sudan B. Russia; the US C. Germany; Singapore D. Zimbabwe; North Korea

A

6. Between 1969 and 2019, for the US value the Gino Coefficient ______ while the Real Median Household Income _______. A. Increased from .391 to .484; increased from $51,863 yo $68,703 B. Increased from 1.143 to 1.295; increased from $48,497 to $58,892 C. Increased from .567 to .614; decreased from $71,984 to $67,982 D. Decreased from .424 to ,396; decreased from $56,942 to $51,648

A

At the free market outcome, there would be a Deadweight-Loss equal to A. Areas a+b B. Areas c+d C. Areas a+b+c+d D. Area e graph 2

A

The value of Marginal External Cost at the efficient quantity of trade is ______. A. $2.45 B. $2.85 C. $5.95 D. $7.50 graph 2

A

Widgets are non-rival in consumption and non-excludable. As a result, if widget were simply sold in the marketplace, we should expect A. Less than the efficient amount of widgets to be traded B. Exactly the efficient amount of widgets to be sold C. More than the efficient amount of widgets to be sold D. None of the above

A