Question 1

The median voter theorem states that the outcome of a majority vote

Accepted Answer

A) tends to favour the preferences of high income individuals and ignore the median voter. 
B) is likely to represent the preferences of society's middle-income voter. 
C) is likely to represent the preferences of the voter who is in the political middle. 
D) is determined by the average consumer and producer in an economy. 
A) tends to favour the preferences of high income individuals and ignore the median voter. 
B) is likely to represent the preferences of society's middle-income voter. 
C) is likely to represent the preferences of the voter who is in the political middle. 
D) is determined by the average consumer and producer in an economy.

Question 2

Unlike the market process, in the political market it is possible for some individuals to receive very large benefits from the political process without any significant impact on their tax bills.

Accepted Answer

A) True 
 B)False

Question 3

Table 15.1
 $\begin{array}{|c|c|c|c|} 
\hline & \text { Ivy } & \text { Jasmine } & \text { Rose } \
\hline \text { Subsidies for education } & \text { 2nd } & \text { 3rd } & \text { 1st } \
\hline \text { Research on Alzheimer's } & \text { 3rd } & \text { 1st } & \text { 2nd } \
\hline \text { Subsidies for daycare } & 1 \text { st } & \text { 2nd } & \text { 3rd }\
\hline
\end{array}$ 
Suppose $1 billion is available in the budget and Parliament is considering allocating the funds to one of the following three alternatives: 1)Subsidies for education, 2)Research on Alzheimer's or 3)Subsidies for daycare. Table 15.1 shows three voters' rankings of the alternatives.
-Refer to Table 15.1.Suppose a series of votes are taken in which each pair of alternatives is considered in turn.If the vote is between allocating funds to subsidies for education and research on Alzheimer's,

Accepted Answer

A) Ivy and Jasmine vote for education subsidies, Rose votes for Alzheimer's research, and education subsidies wins. 
B) Ivy and Rose vote for education subsidies, Jasmine votes for Alzheimer's research, and education subsidies wins. 
C) Jasmine and Rose vote for Alzheimer's research, Ivy votes for education subsidies, and Alzheimer's research wins. 
D) Jasmine and Ivy vote for Alzheimer's research, Rose votes for education subsidies, and Alzheimer's research wins. 
A) Ivy and Jasmine vote for education subsidies, Rose votes for Alzheimer's research, and education subsidies wins. 
B) Ivy and Rose vote for education subsidies, Jasmine votes for Alzheimer's research, and education subsidies wins. 
C) Jasmine and Rose vote for Alzheimer's research, Ivy votes for education subsidies, and Alzheimer's research wins. 
D) Jasmine and Ivy vote for Alzheimer's research, Rose votes for education subsidies, and Alzheimer's research wins.

Question 4

Between 1976 and 2010, income inequality in Canada has increased in part due to rapid technological change.How does technological change contribute to income inequality?

Accepted Answer

A) Advancements in technology displace skilled and unskilled workers in certain fields, leading to higher unemployment rates. 
B) Technology complements the skills of the well-educated while rendering redundant the labour services of unskilled and low-skilled workers. This causes a decline in the wages of low and unskilled workers relative to other workers. 
C) The opportunity cost of investing in technology is investments in human capital. The resulting decrease in labour's marginal productivity has led to lower wages. 
D) Technological change favours the owners of capital and since high income individuals tend to own capital, income inequality is further exacerbated. 
A) Advancements in technology displace skilled and unskilled workers in certain fields, leading to higher unemployment rates. 
B) Technology complements the skills of the well-educated while rendering redundant the labour services of unskilled and low-skilled workers. This causes a decline in the wages of low and unskilled workers relative to other workers. 
C) The opportunity cost of investing in technology is investments in human capital. The resulting decrease in labour's marginal productivity has led to lower wages. 
D) Technological change favours the owners of capital and since high income individuals tend to own capital, income inequality is further exacerbated.

Question 5

Absolute poverty measures vary from country to country.For example, in 2012, the low income cut-off in Canada was an annual income of approximately $20,000 but economists often use a much lower threshold income of $1 per day when calculating the rate of poverty in poor countries.How is this absolute poverty measured?

Accepted Answer

A) by comparing the percentage of households living below the poverty line to the total population 
B) by comparing a household's income to the income required to maintain the average standard of living in a society at a particular time 
C) by comparing the amount of goods and services that a household's income can purchase to an objective measure of the amount of income needed to sustain a certain predetermined standard of living 
D) by comparing the amount of goods and services that a household's income can purchase in one country to the amount of goods and services that a household's income can purchase in another country of comparable living standard 
A) by comparing the percentage of households living below the poverty line to the total population 
B) by comparing a household's income to the income required to maintain the average standard of living in a society at a particular time 
C) by comparing the amount of goods and services that a household's income can purchase to an objective measure of the amount of income needed to sustain a certain predetermined standard of living 
D) by comparing the amount of goods and services that a household's income can purchase in one country to the amount of goods and services that a household's income can purchase in another country of comparable living standard

Question 6

Absolute poverty is

Accepted Answer

A) not being able to afford the same things as every one else. 
B) an income in the bottom 20 percent of the population. 
C) not being able to afford the essentials of life. 
D) an income below the median. 
A) not being able to afford the same things as every one else. 
B) an income in the bottom 20 percent of the population. 
C) not being able to afford the essentials of life. 
D) an income below the median.

Question 7

Compare the distribution of income in Canada with the distribution of income in other high-income countries.

Accepted Answer

Income in Canada is

Question 8

According to public choice theory, policymakers

Accepted Answer

A) place the interests of the public above their own self-interest. 
B) are likely to pursue their own self-interest, even if their self-interest conflicts with the public interest. 
C) act in ways to maximize economic efficiency. 
D) act in ways to bring about an equitable distribution of society's wealth. 
A) place the interests of the public above their own self-interest. 
B) are likely to pursue their own self-interest, even if their self-interest conflicts with the public interest. 
C) act in ways to maximize economic efficiency. 
D) act in ways to bring about an equitable distribution of society's wealth.

Question 9

Table 15.6
 $\begin{array}{|c|c|c|}
\hline \text { Income Quintile } & \begin{array}{c}
\text { Agraria } \
\text { Percentage of Total } \
\text { Income }
\end{array} & \begin{array}{c}
\text { Urbana } \
\text { Percentage of Total } \
\text { Income }
\end{array} \
\hline \text { Lowest 20\% } & 3 \% & 5 \% \
\hline \text { Second quintile } & 9 \% & 14 \% \
\hline \text { Third quintile } & 14 \% & 20 \% \
\hline \text { Fourth quintile } & 24 \% & 24 \% \
\hline \text { Highest 20\% } & 50 \% & 37 \% \
\hline
\end{array}$ 
Table 15.6 shows income distribution data for two countries. Use this data to answer the following questions.
-Refer to Table 15.6.
a.Draw a Lorenz curve for each country.
b.Which country has the more equal distribution of income?
c.Based on the Lorenz curve for the two countries, can you determine which country has the more progressive tax system? Explain your answer.

Accepted Answer

a.See diagram below.
 @#IMG-DLM& 
b.Urba

Question 10

Figure 15.1
  
-Refer to Figure 15.1.The sales tax revenue collected by the government is represented by the area

Accepted Answer

A) B + C. 
B) F + G. 
C) E + H. 
D) B + C + F + G. 
A) B + C. 
B) F + G. 
C) E + H. 
D) B + C + F + G.

Question 11

Some economists who use the public choice model to explain the ways government intervenes in the economy believe that regulatory capture results when an agency or commission is given authority over a particular industry or product.Which of the following is the best example of regulatory capture?

Accepted Answer

A) Health Canada has increased the time and expense pharmaceutical firms incur to receive approval to market a new drug. 
B) A federal government agency hires more employees than it requires to regulate an industry because it does not seek to minimize costs or maximize the agency's profits. 
C) The head of an agency is required to testify before Parliament because Parliament controls the size of the agency's budget. Parliament "captures" the agency because of its budget authority. 
D) Firms running taxi services get local governments to keep the number of taxi licences in their cities small. 
A) Health Canada has increased the time and expense pharmaceutical firms incur to receive approval to market a new drug. 
B) A federal government agency hires more employees than it requires to regulate an industry because it does not seek to minimize costs or maximize the agency's profits. 
C) The head of an agency is required to testify before Parliament because Parliament controls the size of the agency's budget. Parliament "captures" the agency because of its budget authority. 
D) Firms running taxi services get local governments to keep the number of taxi licences in their cities small.

Question 12

Describe the main factors economists believe cause inequality of income.

Accepted Answer

The distribution of income is based main

Question 13

Figure 15.1
  
-Refer to Figure 15.1.The excess burden of the tax is represented by the area

Accepted Answer

A) B + C. 
B) F + G. 
C) E + H. 
D) B + C + F + G. 
A) B + C. 
B) F + G. 
C) E + H. 
D) B + C + F + G.

Question 14

If the government is most interested in minimizing excess burden of an excise tax, should it impose the tax on goods that are elastic or on goods that are inelastic?

Accepted Answer

If the government wants to min

The median voter theorem states that the outcome of a majority vote

Unlike the market process, in the political market it is possible for some individuals to receive very large benefits from the political process without any significant impact on their tax bills.

Between 1976 and 2010, income inequality in Canada has increased in part due to rapid technological change.How does technological change contribute to income inequality?

Absolute poverty is

Compare the distribution of income in Canada with the distribution of income in other high-income countries.

According to public choice theory, policymakers

Figure 15.1 -Refer to Figure 15.1.The sales tax revenue collected by the government is represented by the area

Some economists who use the public choice model to explain the ways government intervenes in the economy believe that regulatory capture results when an agency or commission is given authority over a particular industry or product.Which of the following is the best example of regulatory capture?

Describe the main factors economists believe cause inequality of income.

Figure 15.1 -Refer to Figure 15.1.The excess burden of the tax is represented by the area

If the government is most interested in minimizing excess burden of an excise tax, should it impose the tax on goods that are elastic or on goods that are inelastic?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labour and Other Factors of Production

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters

Exam 15: Public Choice, Taxes, and the Distribution of Income

The median voter theorem states that the outcome of a majority vote

Unlike the market process, in the political market it is possible for some individuals to receive very large benefits from the political process without any significant impact on their tax bills.

Between 1976 and 2010, income inequality in Canada has increased in part due to rapid technological change.How does technological change contribute to income inequality?

Absolute poverty is

Compare the distribution of income in Canada with the distribution of income in other high-income countries.

According to public choice theory, policymakers

Figure 15.1 -Refer to Figure 15.1.The sales tax revenue collected by the government is represented by the area

Some economists who use the public choice model to explain the ways government intervenes in the economy believe that regulatory capture results when an agency or commission is given authority over a particular industry or product.Which of the following is the best example of regulatory capture?

Describe the main factors economists believe cause inequality of income.

Figure 15.1 -Refer to Figure 15.1.The excess burden of the tax is represented by the area

If the government is most interested in minimizing excess burden of an excise tax, should it impose the tax on goods that are elastic or on goods that are inelastic?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labour and Other Factors of Production

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters