Exam3Review - Name: _ Exam 3 Review (Chapters 12, 13, 14,...

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Name: ________________________ 1 Exam 3 Review (Chapters 12, 13, 14, 15, 16, and 17) Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Tax incidence refers to a. what product or service the tax is levied on. b. who bears the tax burden. c. what sector of the economy is most affected by the tax. d. the dollar value of the tax revenues. ____ 2. You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) two people with the same total income would pay taxes of the same amount, and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person. Which of the following tax systems could achieve both goals? a. a lump-sum tax b. a regressive tax c. a progressive tax d. a proportional tax ____ 3. Which of the following is the best example of a variable cost? a. Monthly wage payments for hired labor. b. Annual property tax payments for a building. c. Monthly rent payments for a warehouse. d. Annual insurance payments for a warehouse. ____ 4. Miller Technologies has average variable costs of $1 and average total costs of $3 when it produces 500 units of output. The firm's total fixed costs equal a. $500 b. $1,000 c. $1,500 d. $2,000 ____ 5. The fundamental reason that marginal cost eventually rises as output increases is because of a. economies of scale. b. diseconomies of scale. c. diminishing marginal product. d. rising average fixed cost.
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2 Table 1 Quantity Price 1 13 2 13 3 13 4 13 5 13 6 13 7 13 8 13 9 13 ____ 6. Refer to Table 1 . The price and quantity relationship in the table is most likely that faced by a firm in a a. monopoly. b. concentrated market. c. competitive market. d. strategic market. ____ 7. If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then a. a one-unit increase in output will increase the firm's profit. b. a one-unit decrease in output will increase the firm's profit. c. total revenue exceeds total cost. d. total cost exceeds total revenue. Scenario 1 Assume a certain firm is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. ____ 8. Refer to Scenario 1 . At Q = 1,000, the firm's profit amounts to a. $-200. b. $1,000. c. $3,000. d. $4,000. ____ 9. Refer to Scenario 1 . To maximize its profit, the firm should a. increase its output. b. continue to produce 1,000 units. c. decrease its output, but continue to produce. d. shut down.
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3 Table 2 The following table presents cost and revenue information for John’s Vineyard. COSTS
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Exam3Review - Name: _ Exam 3 Review (Chapters 12, 13, 14,...

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