the social security tax rate increases as income increases.
no social security tax is collected for incomes in excess of a set income level.
each individual must pay a set percentage of his or her income in social security taxes.
as income increases, the social security tax rate increases at a decreasing rate.
Question 2.2. An increase in the price of a good will cause total revenue to fall if price elasticity of demand is: (Points : 1)
Question 3.3. The Mear Corporation finds that its total spending on machine parts increases after the price of machine parts falls, other things being equal. Which of the following is true about the Mear Corporation's demand for machine parts with the price change? (Points : 1)
It is unit elastic.
It is price elastic.
It is price inelastic.
It is perfectly inelastic.
Question 4.4. A public good: (Points : 1)
generally results in substantial spillover costs.
can never be provided by a nongovernmental organization.
can't be provided to one person without making it available to others as well.
costs essentially nothing to produce and thus is provided by the government at a zero price.
Question 5.5. Which is necessarily true if the government were to replace a progressive income tax system with a proportional one? (Points : 1)
Lower income groups would pay less tax.
Higher income groups would pay less tax.
Lower income groups would pay more tax.
The distribution of after-tax income would become less equal.
Question 6.6. If a product has a short-run elasticity of supply equal to zero, then an increase in the demand for the product will: (Points : 1)
have no effect on price or quantity sold.
increase price and leave quantity sold unchanged.
increase price and reduce the quantity sold to zero.
leave the price unchanged and reduce the quantity sold.
Question 7.7. An effective price ceiling will: (Points : 1)
induce new firms to enter the industry.
result in a product surplus.
result in a product shortage.
clear the market.
Question 8.8. If there are positive externalities associated with the consumption of a good or service: (Points : 1)
the private demand curve will overestimate the true demand curve.
the private demand curve will underestimate the true demand curve.
consumers will be willing to pay for all these benefits in private markets.
the market demand curve will be the vertical summation of the individual demand costs.
Question 9.9. A state government wants to increase the taxes on cigarettes to increase tax revenue. This tax would only be effective in raising new tax revenues if the price elasticity of demand is: (Points : 1)
Question 10.10. When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes: (Points : 1)
the cost effect.
the inflationary effect.
the income effect.
the substitution effect.
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