Exam F - Introduction to Microeconomics Exam No 2 Multiple...

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Introduction to Microeconomics Exam No. 2 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. ____ 2. ____ 3. Which of the following statements is correct? a. Assuming that explicit costs are positive, economic profit is greater than accounting profit. b. Assuming that implicit costs are positive, accounting profit is greater than economic profit. c. Assuming that explicit costs are positive, accounting profit is equal to economic profit. d. Assuming that implicit costs are positive, economic profit is positive. Which of the following statements is correct regarding a tax on a good and the resulting deadweight loss? a. The smaller is the wedge between the effective price to sellers and the effective price to buyers, the greater is the deadweight loss. b.The greater are the price elasticities of supply and demand, the greater is the deadweight loss. c. The smaller are the decreases in quantity demanded and quantity supplied, the greater the deadweight loss. d. The greater is the price elasticity of supply and the smaller is the price elasticity of demand, the greater is the deadweight loss. Dick owns a dog whose barking annoys Dick's neighbor Jane. Suppose that the benefit of owning the dog is worth $200 to Dick and that Jane bears a cost of $400 from the barking. Assuming Dick has the legal right to keep the dog, a possible private solution to this problem is that a. Jane pays Dick $300 to give the dog to his parents who live on an isolated farm. b. Dick pays Jane $350 for her inconvenience. c. There is no private transaction that would improve this situation. d.Jane pays Dick $150 to give the dog to his parents who live on an isolated farm. Figure 8-2 The vertical distance between points A and B represents a tax in the market. 12 11 10 9 8 7 6 5 4 3 2 1 A B Supply Demand Price 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Quantity ____ 4. ____ 5. ____ 6. ____ 7. Refer to Figure 8-2. The amount of deadweight loss as a result of the tax is a. $2.50. b. $5. c. $7.50. d. $10. Figure 8-1 P' P'' P''' Price J KI LY MB N Supply D e ma n d Quantity
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Refer to Figure 8-1. Suppose the government imposes a tax of P’ - P’’’. The area measured by I+J+K+L+M+Y represents a. consumer surplus before the tax. b. deadweight loss from the tax. c. total surplus after the tax. d. total surplus before the tax. At the local park there is a playground for children to use. While anyone is allowed to use the playground, it is often very busy, reducing the enjoyment of many of the children who use it. The playground is a a. common resource. b. private good. c. public good. d. natural monopoly. Table 12-17 TAX A Refer to Table 12-17 . A progressive tax is illustrated by tax a. B. b. D. c. C. d. A. Table 12-1 TAX B TAX C TAX D INCOME AMOUNT OF TAX AMOUNT OF TAX AMOUNT OF TAX AMOUNT OF TAX $50,000 $12,500 (25%) $15,000 (30%) $10,000 (20%) $15,000 (30%) 100,000 $25,000 (25%) $25,000 (25%) $25,000 (25%) $15,000 (15%) 200,000 $50,000 (25%) $40,000 (20%) $60,000 (30%) $15,000 (7.5%) On Taxable Income . ..
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This note was uploaded on 09/27/2011 for the course ECON 101 taught by Professor Gottlieb during the Spring '08 term at Rutgers.

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Exam F - Introduction to Microeconomics Exam No 2 Multiple...

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