1) Which of the following would not be considered a negative externality?
a.Smelter, Inc. creates steel and pollution.
b.Your friend buys a new puppy that barks every night.
c.You have an adverse reaction to a medication your doctor prescribed for you.
d.Your neighbor plays loud music that you dislike through stereo speakers set up on his
deck.
2) Ken and Traci are two woodworkers who both make tables and chairs. In one month,
Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs.
Given this, we know that
a.Ken has an absolute advantage in chairs.
b.Ken has a comparative advantage in tables.
c.Traci has an absolute advantage in chairs.
d.Traci has a comparative advantage in chairs.
3) Demand is elastic if the is
a.less than 1
b.equal to 1
c.equal to 0
d.greater than 1
4) Deadweight losses represent the
a.inefficiency that taxes create.
b.shift in benefit from producers to consumers.
c.part of consumer and producer surplus that is now revenue to the government.
d.increase in revenue to the government.
5)
A gym membership at a gym that always has space in classes and on machines is an
example of the type of good represented by Box
a.A.
b.B.
c.C.
d.D.
6) Domestic producers of a good become worse off, and domestic consumers of a good
become better off, when a country begins allowing international trade in that good and
a.the country becomes an importer of the good as a result.
b.the world price exceeds the domestic price of the good that prevailed before
international trade was allowed.
c.the country in question has a comparative advantage, relative to other countries, in
producing the good.
d.total surplus does not change as a result.
7) Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.
Bill is a single person whose taxable income is $35,000 a year. What is his average tax
rate in 2012?
a. 17.6%
b. 20.5%
c. 21.3%
d. 26.2%
8) Which of the following is not an advantage of a lump-sum tax in comparison to other
types of taxes?
a.It would not cause deadweight loss.
b.It imposes a minimal administrative burden on taxpayers.
c.It is more equitable.
d.It is more efficient.
9) A consumption tax is a tax on
a.goods but not on services.
b.the amount of income that people spend.
c.the amount of income that people earn.
d.the amount of income that people save.
10) Deadweight losses are associated with
a.taxes that distort the incentives that people face.
b.taxes that target expenditures on survivor’s benefits for Social Security.
c.taxes that have no efficiency losses.
d.lump-sum taxes.
11) Figure 9-13
With trade, the country
a.exports 200 units of the good.
b.exports 400 units of the good.
c.imports 400 units of the good.
d.imports 600 units of the good.
12) Tom Brady should probably not mow his own lawn because
a.his opportunity cost of mowing his lawn is higher than the cost of paying someone to
mow it for him.
b.he has a comparative advantage in mowing his lawn relative to a landscaping service.
c.he has an absolute advantage in mowing his lawn relative to a landscaping service.
d.he might sprain his ankle.
13) The maximin criterion for government policies is associated with
a.the school of thought called utilitarianism.
b.the school of thought called liberalism.
c.the school of thought called libertarianism.
d.the school of thought called stoicism.