Question Question 1 2 out of 2 points

03 Jun Question Question 1 2 out of 2 points

Question
Question 1
2 out of 2 points

A well-designed tax system should attempt to avoid

corporate income taxes.

lump-sum taxes.

deadweight losses and administrative burdens.

Question 2

2 out of 2 points

Suppose that some firms in a competitive industry are earning negative profits in the short run. If there is no change in the firms’ costs or the market price, in the long run these firms will shut down, thereby reducing the number of firms in the industry.

Question 3

2 out of 2 points

The Coase Theorem states that

efficient outcomes can be accomplished by private parties even when externalities are present, as long as there are no bargaining costs.

there are costs to negotiating externalities.

the government cannot solve externality problems without the intervention of private parties.

it is impossible to solve externality problems without the aid of government.

Question 4

2 out of 2 points

A general lesson learned from the Tragedy of the Commons is that when one person uses a common resource, other people’s enjoyment of the common resource is unaffected.

Question 5

2 out of 2 points

Public goods are goods that are both excludable and rival in consumption.

Question 6

2 out of 2 points

Sellers will bear the greater burden of a tax when supply is more elastic than demand.

Question 7

0 out of 2 points

Suppose the government levies a $1 per unit tax on a product. Which of the following statements is correct?

If the tax is imposed on the buyers of the product, the buyers will always bear the greater burden of the tax.

If the tax is imposed on the sellers of the product, the sellers will always bear the greater burden of the tax.

How the burden of the tax is shared between the buyers and the sellers does not depend on whether the tax is imposed on the buyers or on the sellers.

I only

III only

I, II, and III

I and II only

Question 8

0 out of 2 points

The decrease in the total surplus in the market without a tax and the total surplus in the market with a tax is referred to as the deadweight loss of the tax.

Response Feedback:

See section: The Deadweight Loss of Taxation.

Question 9

2 out of 2 points

Beyond the gains in total surplus that result from allowing free trade, free trade also has the benefit of providing consumers with an increased variety of goods from which to choose.

Question 10

0 out of 2 points

Goods with more close substitutes tend to have a more inelastic price elasticity of demand.

Question 11

2 out of 2 points

The largest source of revenue for the federal government is corporate income taxes.

2 out of 2 points

If supply were to increase in a market, lowering the equilibrium price, total consumer surplus in the market would increase.

Question 13

0 out of 2 points

When a tax is imposed on a market, if the tax is imposed on the buyers in the market, total consumer surplus will fall and total producer surplus will rise.

Question 14

2 out of 2 points

When average total costs are increasing in the long run, the firm is experiencing diseconomies of scale.

Question 15

2 out of 2 points

When a country allows free trade of a good, if the world price is higher than the domestic price, the country will become an exporter of that good.

Question 16

2 out of 2 points

Which of the following can be used to calculate total surplus?

I.total consumer surplus plus total producer surplus

II.value to buyers minus cost to sellers

Both I and II

II only

Neither I nor II

I only

Question 17

2 out of 2 points

Rent controls lead to a shortage in the housing market and, as a result, landlords have less incentive to maintain their apartments.

Question 18

2 out of 2 points

If the cross-price elasticity of demand between two goods is positive then the two goods are substitutes.

Question 19

2 out of 2 points

Goods that are neither excludable nor rival in consumption are called

club goods.

common resources.

public goods.

private goods.

Question 20

2 out of 2 points

In a perfectly competitive market,

only one producer supplies the product to the market.

the sellers have the ability to influence the market price by increasing or decreasing their level of production.

the products available for sale vary widely from seller to seller.

the number of buyers and sellers is so large that no individual buyer or seller has any influence over the price.

Question 21

2 out of 2 points

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good falls.

Question 22

0 out of 2 points

Suppose your local coffee shop offers free wireless internet service to all customers who make a purchase. The coffee shop has a powerful wireless signal, so the speed of the service does not fall when additional customers enter the shop and connect to the service. What type of good is the wireless internet service in this case?

club good

common resource

public good

private good

Response Feedback:

Question 23

2 out of 2 points

Which of the following would we expect to shift the supply curve for a product to the left?

a decrease in the prices of the inputs used to produce the good

an expectation that the price of the good will be higher in the future than it is today

an increase in the number of suppliers in the market

an improvement in the technology used to produce the good

Question 24

2 out of 2 points

In a market that starts out in equilibrium, if supply were to increase at the same time that demand were to decrease we would expect the equilibrium price to fall.

Question 25

2 out of 2 points

A firm in a competitive industry should consider both sunk costs and non-sunk costs when choosing how much output to produce.

Question 26

2 out of 2 points

Which of the following would you expect to have the most inelastic price elasticity of demand?

The demand for natural gas six months after a price increase.

The demand for natural gas one year after a price increase.

The demand for natural gas the day of a price increase.

The demand for natural gas one month aft