{"id":181342,"date":"2018-02-20T23:50:30","date_gmt":"2018-02-20T23:50:30","guid":{"rendered":"https:\/\/writemyessayfree.com\/post-eco202-midterm-exam"},"modified":"2018-10-24T09:07:11","modified_gmt":"2018-10-24T09:07:11","slug":"post-eco202-midterm-exam","status":"publish","type":"post","link":"https:\/\/www.benedictsol.com\/blogs\/post-eco202-midterm-exam\/","title":{"rendered":"POST ECO202 MIDTERM EXAM"},"content":{"rendered":"

Question 1<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

A well-designed tax system should attempt to avoid<\/span><\/p>\n

corporate income taxes.<\/span><\/p>\n

lump-sum taxes.<\/span><\/p>\n

deadweight losses and administrative burdens.<\/span><\/p>\n

Question 2<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

Suppose that some firms in a competitive industry are earning negative profits in the short run. If there is no change in the firms\u2019 costs or the market price, in the long run these firms will shut down, thereby reducing the number of firms in the industry.<\/span><\/p>\n

Question 3<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

The Coase Theorem states that<\/span><\/p>\n

efficient outcomes can be accomplished by private parties even when externalities are present, as long as there are no bargaining costs.<\/span><\/p>\n

there are costs to negotiating externalities.<\/span><\/p>\n

the government cannot solve externality problems without the intervention of private parties.<\/span><\/p>\n

it is impossible to solve externality problems without the aid of government.<\/span><\/p>\n

Question 4<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

A general lesson learned from the Tragedy of the Commons is that when one person uses a common resource, other people\u2019s enjoyment of the common resource is unaffected.<\/span><\/p>\n

Question 5<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

Public goods are goods that are both excludable and rival in consumption.<\/span><\/p>\n

Question 6<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

Sellers will bear the greater burden of a tax when supply is more elastic than demand.<\/span><\/p>\n

Question 7<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

Suppose the government levies a $1 per unit tax on a product. Which of the following statements is correct?<\/span><\/p>\n

If the tax is imposed on the buyers of the product, the buyers will always bear the greater burden of the tax.<\/span><\/p>\n

If the tax is imposed on the sellers of the product, the sellers will always bear the greater burden of the tax.<\/span><\/p>\n

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.<\/span><\/p>\n

I only<\/span><\/p>\n

III only<\/span><\/p>\n

I, II, and III<\/span><\/p>\n

I and II only<\/span><\/p>\n

Question 8<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

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.<\/span><\/p>\n

Response Feedback:<\/span><\/p>\n

See section: The Deadweight Loss of Taxation.<\/span><\/p>\n

Question 9<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

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.<\/span><\/p>\n

Question 10<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

Goods with more close substitutes tend to have a more inelastic price elasticity of demand.<\/span><\/p>\n

Question 11<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

The largest source of revenue for the federal government is corporate income taxes.<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

If supply were to increase in a market, lowering the equilibrium price, total consumer surplus in the market would increase.<\/span><\/p>\n

Question 13<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

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.<\/span><\/p>\n

Question 14<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

When average total costs are increasing in the long run, the firm is experiencing diseconomies of scale.<\/span><\/p>\n

Question 15<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

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.<\/span><\/p>\n

Question 16<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

Which of the following can be used to calculate total surplus?<\/span><\/p>\n

I.total consumer surplus plus total producer surplus<\/span><\/p>\n

II.value to buyers minus cost to sellers<\/span><\/p>\n

Both I and II<\/span><\/p>\n

II only<\/span><\/p>\n

Neither I nor II<\/span><\/p>\n

I only<\/span><\/p>\n

Question 17<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

Rent controls lead to a shortage in the housing market and, as a result, landlords have less incentive to maintain their apartments.<\/span><\/p>\n

Question 18<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

If the cross-price elasticity of demand between two goods is positive then the two goods are substitutes.<\/span><\/p>\n

Question 19<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

Goods that are neither excludable nor rival in consumption are called<\/span><\/p>\n

club goods.<\/span><\/p>\n

common resources.<\/span><\/p>\n

public goods.<\/span><\/p>\n

private goods.<\/span><\/p>\n

Question 20<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

In a perfectly competitive market,<\/span><\/p>\n

only one producer supplies the product to the market.<\/span><\/p>\n

the sellers have the ability to influence the market price by increasing or decreasing their level of production.<\/span><\/p>\n

the products available for sale vary widely from seller to seller.<\/span><\/p>\n

the number of buyers and sellers is so large that no individual buyer or seller has any influence over the price.<\/span><\/p>\n

Question 21<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good falls.<\/span><\/p>\n

Question 22<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

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?<\/span><\/p>\n

club good<\/span><\/p>\n

common resource<\/span><\/p>\n

public good<\/span><\/p>\n

private good<\/span><\/p>\n

Response Feedback:<\/span><\/p>\n

Question 23<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

Which of the following would we expect to shift the supply curve for a product to the left?<\/span><\/p>\n

a decrease in the prices of the inputs used to produce the good<\/span><\/p>\n

an expectation that the price of the good will be higher in the future than it is today<\/span><\/p>\n

an increase in the number of suppliers in the market<\/span><\/p>\n

an improvement in the technology used to produce the good<\/span><\/p>\n

Question 24<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

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.<\/span><\/p>\n

Question 25<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

A firm in a competitive industry should consider both sunk costs and non-sunk costs when choosing how much output to produce.<\/span><\/p>\n

Question 26<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

Which of the following would you expect to have the most inelastic price elasticity of demand?<\/span><\/p>\n

The demand for natural gas six months after a price increase.<\/span><\/p>\n

The demand for natural gas one year after a price increase.<\/span><\/p>\n

The demand for natural gas the day of a price increase.<\/span><\/p>\n

The demand for natural gas one month after a price increase.<\/span><\/p>\n

Question 27<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

Markets with positive externalities do not trade the optimal quantity because<\/span><\/p>\n

producers fail to consider the external cost in their decision-making process.<\/span><\/p>\n

consumers fail to consider the external benefit in their decision-making process.<\/span><\/p>\n

bystanders are not important members of society.<\/span><\/p>\n

the government fails to provide markets with all the information needed for an efficient outcome.<\/span><\/p>\n

Question 28<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

Taxes enacted to deal with the effects of negative externalities are called corrective taxes or, sometimes, Pigovian taxes.<\/span><\/p>\n

Question 29<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

When the cross-price elasticity of demand between two goods is negative we know that the two goods are<\/span><\/p>\n

substitutes.<\/span><\/p>\n

complements.<\/span><\/p>\n

normal goods.<\/span><\/p>\n

inferior goods.<\/span><\/p>\n

Question 30<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

When the world price is below the domestic price, if the country allows trade but implements a tariff to reduce the quantity of imports,<\/span><\/p>\n

the domestic quantity demanded will increase as a result of the tariff.<\/span><\/p>\n

consumer surplus will increase as a result of the tariff.<\/span><\/p>\n

total surplus will increase as a result of the tariff.<\/span><\/p>\n

the tariff will cause a deadweight loss.<\/span><\/p>\n

Question 31<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

When the size of a tax in a market is increased, tax revenue will always increase as well.<\/span><\/p>\n

Question 32<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

Which of the following would be an example of an opportunity cost to an airline?<\/span><\/p>\n

the cost of the jet fuel<\/span><\/p>\n

the rent that could be earned on an aircraft that is owned by the airline<\/span><\/p>\n

the salaries paid to the pilots<\/span><\/p>\n

All of these choices are correct.<\/span><\/p>\n

Question 33<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

In a competitive market, the market equilibrium is efficient.<\/span><\/p>\n

Question 34<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

For a firm in a competitive industry, marginal revenue and average revenue are equal to price.<\/span><\/p>\n

Question 35<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

A tax for which high-income taxpayers pay a smaller fraction of their income than do low-income taxpayers is called a<\/span><\/p>\n

marginal tax<\/span><\/p>\n

progressive tax.<\/span><\/p>\n

proportional tax.<\/span><\/p>\n

regressive tax.<\/span><\/p>\n

Question 36<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

Which of the following statement\/s is correct?<\/span><\/p>\n

I.Producer surplus is the difference between the price of the good and the producer\u2019s cost.<\/span><\/p>\n

II.Total producer surplus is the area that lies below the price and above the supply curve.<\/span><\/p>\n

III.A decrease in the market price will increase producer surplus.<\/span><\/p>\n

I, II, and III<\/span><\/p>\n

II and III only<\/span><\/p>\n

I and II only<\/span><\/p>\n

I only<\/span><\/p>\n

Question 37<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

A firm in a competitive industry maximizes profits by choosing an output level where marginal revenue exceeds marginal cost by the greatest amount.<\/span><\/p>\n

Question 38<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

Which of the following is not a characteristic of a perfectly competitive market?<\/span><\/p>\n

.<\/span><\/p>\n

Answers:<\/span><\/p>\n

Correct<\/span><\/p>\n

Each firm can set its price.<\/span><\/p>\n

There are many buyers.<\/span><\/p>\n

Each firm sells an identical product.<\/span><\/p>\n

There are many sellers.<\/span><\/p>\n

Question 39<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

If demand is inelastic, then<\/span><\/p>\n

raising price will lower total revenue<\/span><\/p>\n

lowering the price may increase or decrease total revenue. We would need additional information to know for sure.<\/span><\/p>\n

lowering price will increase total revenue.<\/span><\/p>\n

raising price will increase total revenue.<\/span><\/p>\n

Question 40<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

When the domestic price of a good is below the world price of a good, we know that<\/span><\/p>\n

allowing free trade will reduce total surplus.<\/span><\/p>\n

the country will likely be an importer of the good if the country allows free trade.<\/span><\/p>\n

the country has a comparative advantage in the production of the good.<\/span><\/p>\n

implementing tariffs will increase total surplus.<\/span><\/p>\n

Question 41<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

Which of the following would be an example of an implicit cost to an airline?<\/span><\/p>\n

the cost of the jet fuel<\/span><\/p>\n

the costs of materials and labor to maintain the airplanes<\/span><\/p>\n

the rent that could be earned on an aircraft that is owned by the airline<\/span><\/p>\n

the salaries paid to the pilots<\/span><\/p>\n

Question 42<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

According to the Coase theorem, even if private parties can bargain over the allocation of resources at no cost, the private market cannot solve the problem of externalities and allocate resources efficiently.<\/span><\/p>\n

ebook : Private Solutions to Externalities<\/span><\/p>\n

Question 43<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

If a firm\u2019s production function reflects diminishing marginal product, its total cost curve will be relatively steep.<\/span><\/p>\n

Question 44<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

In which of the following cases would the buyers most likely bear the greater burden of a tax?<\/span><\/p>\n

A market in which demand is very elastic and supply is very elastic.<\/span><\/p>\n

A market in which demand is very elastic and supply is very inelastic.<\/span><\/p>\n

A market in which demand is very inelastic and supply is very inelastic.<\/span><\/p>\n

A market in which demand is very inelastic and supply is very elastic.<\/span><\/p>\n

Question 45<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

Diminishing marginal product of labor occurs when each additional worker hired<\/span><\/p>\n

reduces the total costs of the firm.<\/span><\/p>\n

contributes a smaller increase in output than previously-hired workers.<\/span><\/p>\n

contributes a smaller increase in total costs than previously-hired workers.<\/span><\/p>\n

reduces the total output produced by the firm.<\/span><\/p>\n

Question 46<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

The benefits principle of taxation states that people should pay taxes based on the benefits they receive from government services.<\/span><\/p>\n

Question 47<\/span><\/p>\n

2 out of 2 points<\/span><\/p>\n

The free-rider problem refers to the<\/span><\/p>\n

abuse of power by some firms when they increase their prices to unreasonable levels.<\/span><\/p>\n

excessive consumption that occurs when goods are given for free during promotional campaigns.<\/span><\/p>\n

fact that when public goods are provided there is no way of preventing people from using them, even if they do not pay for them.<\/span><\/p>\n

under-use of common resources.<\/span><\/p>\n

Question 48<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

If the world price is below the domestic price of a good in a country, allowing free trade will lower total surplus in the country.<\/span><\/p>\n

Question 49<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

In which of the following cases would you expect the deadweight loss from a tax to be the smallest?<\/span><\/p>\n

Elastic demand and inelastic supply<\/span><\/p>\n

Inelastic demand and elastic supply<\/span><\/p>\n

Elastic demand and elastic supply<\/span><\/p>\n

Inelastic demand and inelastic supply<\/span><\/p>\n

Response Feedback:<\/span><\/p>\n

See section: The Determinants of Deadweight Loss. The greater the elasticities of demand and supply, the greater the deadweight loss of a tax. Therefore, we would expect the deadweight loss to be smallest in a market with inelastic demand and inelastic supply.<\/span><\/p>\n

Question 50<\/span><\/p>\n

0 out of 2 points<\/span><\/p>\n

Suppose a tax in a market is increased from $3 to $6. As a result, we would expect the deadweight loss to increase by a factor of<\/span><\/p>\n

3<\/span><\/p>\n

4<\/span><\/p>\n

2<\/span><\/p>\n

 <\/p>\n

Click here to have a similar paper done for you by one of our writers within the set deadline at a discounted<\/a>\u2026<\/i>9<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

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 Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-181342","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/181342","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=181342"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/181342\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=181342"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=181342"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=181342"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}