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Unformatted text preview: Name Test Form A Economics 1 Quiz 2 November 3, 2010 True-False Questions: Fill in Bubble A for True, Bubble B for False. 1. In a competitive equilibrium, buyers are better off if a per unit tax is levied on sellers than they would be if a tax of the same amount were levied on them. 2. If the demand curve for a good is downward sloping and the supply curve for the good is upward sloping, the loss in buyers and sellers profits from a per unit tax on the good will be greater than the revenue the government receives from the tax. 3. If the supply curve for a good is perfectly inelastic, a per unit tax on buyers of the good will not decrease the profits of buyers. 4. With a system of marketable pollution permits, a polluter will buy a permit instead of reducing pollution if the marginal cost of reducing pollution is greater than the price of a permit for one unit of pollution. 5. If the purchase of a good causes a negative externality, a competitive equilibrium in the market for that good may not be efficient. Multiple Choice Questions 6. In The Indifference Principle, Stephen Landsberg tells the fable of Cleanstown and Grimyville. In that fable, who benefits from the Clean Air Act in Grimyville? (a) Business owners in Cleanstown (b) Renters in Grimyville (c) Property owners in Grimyville (d) Property owners in Cleanstown (e) Renters in Cleanstown Economics 1 2 7. Ed earns $20 an hour tutoring students in economics. Requests for his services are numerous. He could easily spend the whole week tutoring. Ed also makes excellent pizzas. To make a pizza, Ed must buy ingredients from a local store for $5. Ed spends 30 minutes shopping for the ingredients and making the pizza. What is Eds opportunity cost of making a pizza?...
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