1) The notion that similar taxpayers should pay similar amounts of taxes is known as
a.vertical equity.
b.the benefits principle.
c.horizontal equity.
d.taxpayer efficiency.
2) Table 12-8
The following table presents the total tax liability for an unmarried taxpayer under four
different tax schedules for the income levels shown.
For an individual with $200,000 in taxable income, which tax schedule has the highest
average tax rate?
a.Tax Schedule A
b.Tax Schedule B
c.Tax Schedule C
d.Tax Schedule D
3) Economists argue that restrictions against ticket scalping actually drive up the cost of
many tickets.
a.True
b.False
4) The distribution of income for Danville is as follows:
If the poverty rate in Danville is 33.3 percent, what is the poverty line in Danville?
a.$15,000.
b.$20,000.
c.$25,000.
d.$30,000.
5) Which of the following statements is correct?
a.Opportunity costs equal explicit minus implicit costs.
b.Economists consider opportunity costs to be included in a firm’s total revenues.
c.Economists consider opportunity costs to be included in a firm’s costs of production.
d.All of the above are correct.
6) The following table contains a monthly demand schedule for large, single-topping,
carry-out pizzas.
If the law of demand applies to these pizzas, then A could be
a. 40
b.35
c.30
d.All of the above could be correct.
7) The nation of Loneland does not allow international trade. In Loneland, you can buy
1 pound of beef for 2 pounds of cheese. In neighboring countries, you can buy 2 pounds
of beef for 3 pounds of cheese. If Loneland were to allow free trade, it would export
cheese.
a.True
b.False
8) Table 14-10
Suppose that a firm in a competitive market faces the following revenues and costs:
If the firm produces the profit-maximizing level of production, how much profit will
the firm earn?
a.$2
b.$4
c.$6
d.$8
9) The poverty line is
a.established by the federal government.
b.approximately equivalent to three times the cost of providing an adequate diet.
c.an absolute level of income below which a family is deemed to be in poverty.
d.All of the above are correct.
10) A sunk cost is one that
a.changes as the level of output changes in the short run.
b.was paid in the past and will not change regardless of the present decision.
c.should determine the rational course of action in the future.
d.has the most impact on profit-making decisions.
11) Figure 9-1
The figure illustrates the market for coffee in Guatemala.
Relative to the no-trade situation, trade with the rest of the world results in
a.Guatemalan consumers paying a higher price for coffee.
b.a decrease in producer surplus in Guatemala.
c.a decrease in total surplus in Guatemala.
d.All of the above are correct.
12) Which of the following events would cause a movement downward and to the left
along the supply curve for mangos?
a.The number of sellers of mangos decreases.
b.There is an advance in technology that reduces the cost of producing mangos.
c.The price of mangos falls.
d.The price of fertilizer increases, and fertilizer is an input in the production of mangos.
13) The marginal tax rates on the richest Americans when Ronald Reagan was elected
and when he left office were
a.28 percent and 50 percent, respectively.
b.70 percent and 40 percent, respectively.
c.40 percent and 70 percent, respectively.
d.50 percent and 28 percent, respectively.
14) Producer surplus is the area
a.under the supply curve.
b.between the supply and demand curves.
c.below the price and above the supply curve.
d.under the demand curve and above the price.
15) Refer to Figure 9-16. The tariff
a.decreases producer surplus by the area C, decreases consumer surplus by the area C +
D + E, and decreases total surplus by the area D + F.
b.increases producer surplus by the area C, decreases consumer surplus by the area C +
D + E + F, and decreases total surplus by the area D + F.
c.creates government revenue represented by the area B + E and decreases total surplus
by the area D + E + F.
d.increases producer surplus by the area C + G and creates government revenue
represented by the area D + E + F.
16) Refer to Figure 9-17. With trade and a tariff, total surplus is
a. $1,224.
b. $1,416.
c. $1,512.
d. $1,704.
17) If we know that the supply curve for good x fails to reflect the total cost to society
of producing that good, then we know that
a.the market for good x is characterized by an externality, but we cannot determine
whether the externality is positive or negative from this fact alone.
b.the market for good x is characterized by a positive externality.
c.the market for good x is characterized by a negative externality.
d.the demand curve for good x fails to reflect the value to society of that good.