Question 1

The Gini coefficient for the United States in 1980 was 0.403.In 2016, the coefficient was equal to 0.481.This means that

Accepted Answer

A) per capita income in the United States rose from 1980 to 2016. 
B) there was a decrease in the amount of government transfer payments from 1980 to 2016. 
C) cuts in federal income tax rates in the early 1980s and 2001 helped to reduce income inequality. 
D) income inequality increased from 1980 to 2016. 
A) per capita income in the United States rose from 1980 to 2016. 
B) there was a decrease in the amount of government transfer payments from 1980 to 2016. 
C) cuts in federal income tax rates in the early 1980s and 2001 helped to reduce income inequality. 
D) income inequality increased from 1980 to 2016.

Question 2

Figure 18-7
   
Figure 18-7 shows the Lorenz curve for a hypothetical country.
-Refer to Figure 18-7.The second lowest 20 percent of households

Accepted Answer

A) earn 12 percent of the society's total income. 
B) earn 16 percent of the society's total income. 
C) earn 28 percent of the society's total income. 
D) earn 40 percent of the society's total income. 
A) earn 12 percent of the society's total income. 
B) earn 16 percent of the society's total income. 
C) earn 28 percent of the society's total income. 
D) earn 40 percent of the society's total income.

Question 3

What is the relationship between market failure and government failure?

Accepted Answer

Market failure is a case where the marke

Question 4

During the past 30 years, income inequality in the United States 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 labor 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 labor's marginal productivity has led to lower wages. 
D) Technological change favors 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 labor 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 labor's marginal productivity has led to lower wages. 
D) Technological change favors the owners of capital and since high-income individuals tend to own capital, income inequality is further exacerbated.

Question 5

Logrolling may result in

Accepted Answer

A) legislation that yields economy-wide benefits, the funding for which is borne primarily by a few of the smallest states. 
B) a majority of Congress supporting legislation that benefits the economic interests of a few, while harming the economic interests of a much larger group. 
C) members of Congress selling their votes on proposed legislation to the highest bidder. 
D) creating limited incentives for policymakers to consider the immediate consequences of their proposed legislation. 
A) legislation that yields economy-wide benefits, the funding for which is borne primarily by a few of the smallest states. 
B) a majority of Congress supporting legislation that benefits the economic interests of a few, while harming the economic interests of a much larger group. 
C) members of Congress selling their votes on proposed legislation to the highest bidder. 
D) creating limited incentives for policymakers to consider the immediate consequences of their proposed legislation.

Question 6

Figure 18-2
   
Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold, the producer's burden of the tax

Accepted Answer

A) is Pₐ - Pd under either supply curve. 
B) is Pb - Pₑ under either supply curve. 
C) is Pₐ - Pd if the supply curve is S₀ and Pb - Pₑ if the supply curve is S₁. 
D) is Pc - Pd if the supply curve is S₀ and Pc - Pₑ if the supply curve is S₁. 
A) is Pₐ - Pd under either supply curve. 
B) is Pb - Pₑ under either supply curve. 
C) is Pₐ - Pd if the supply curve is S₀ and Pb - Pₑ if the supply curve is S₁. 
D) is Pc - Pd if the supply curve is S₀ and Pc - Pₑ if the supply curve is S₁.

Question 7

When the demand for a product is less elastic than the supply,

Accepted Answer

A) consumers pay the majority of the tax on the product. 
B) firms pay the majority of the tax on the product. 
C) firms pay the entire tax on the product. 
D) consumers pay the entire tax on the product. 
A) consumers pay the majority of the tax on the product. 
B) firms pay the majority of the tax on the product. 
C) firms pay the entire tax on the product. 
D) consumers pay the entire tax on the product.

Question 8

A key assumption of the public choice model is that government policymakers will pursue their own self-interests.Economists assume that consumers and firms pursue their own self-interests when they interact in competitive markets and this interaction results in efficient economic outcomes.Does the pursuit of self-interest by policymakers result in efficient economic outcomes?

Accepted Answer

The public choice model can be used to e

Question 9

A key insight of the public choice model is that public policymakers are likely to pursue the public's interest, even if their self-interests conflict with the public interest.

Accepted Answer

A) True 
 B)False

Question 10

A tax bracket is

Accepted Answer

A) the percent of taxable income paid in taxes at a specific income bracket. 
B) the income range within which a particular tax rate applies. 
C) the type of tax structure for which a range of taxes applies. 
D) the range, from the high to the low tax rate, of a particular type of tax. 
A) the percent of taxable income paid in taxes at a specific income bracket. 
B) the income range within which a particular tax rate applies. 
C) the type of tax structure for which a range of taxes applies. 
D) the range, from the high to the low tax rate, of a particular type of tax.

Question 11

The largest source of revenue for the federal government of the United States is from

Accepted Answer

A) tariffs collected on imported goods. 
B) property taxes imposed on private property. 
C) sales taxes on items purchased for consumption. 
D) individual income taxes. 
A) tariffs collected on imported goods. 
B) property taxes imposed on private property. 
C) sales taxes on items purchased for consumption. 
D) individual income taxes.

Question 12

If grocery stores were legally required to charge a 10-cent fee for disposable grocery bags, who would bear the largest burden of this fee?

Accepted Answer

Since consumers need groceries and would

Question 13

Figure 18-2
   
Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other.
-Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold, the consumer's burden of the tax

Accepted Answer

A) is greater under the more elastic supply curve S₀. 
B) is greater under the less elastic supply curve S₀. 
C) is greater under the less elastic supply curve S₁. 
D) is the same under either supply curve because there is a single demand curve that captures buyers' market behavior. 
A) is greater under the more elastic supply curve S₀. 
B) is greater under the less elastic supply curve S₀. 
C) is greater under the less elastic supply curve S₁. 
D) is the same under either supply curve because there is a single demand curve that captures buyers' market behavior.

Question 14

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 15

The federal corporate income tax is

Accepted Answer

A) regressive. 
B) proportional. 
C) progressive. 
D) unfair. 
A) regressive. 
B) proportional. 
C) progressive. 
D) unfair.

Question 16

The median voter theorem will be an accurate predictor of the outcomes of elections

Accepted Answer

A) only when voter turnout is very high. 
B) when a majority of voters have preferences very similar to those of the median voter. 
C) when a majority of voters have preferences different from those of the median voter. 
D) regardless of whether preferences among voters are similar or different from those of the median voter. 
A) only when voter turnout is very high. 
B) when a majority of voters have preferences very similar to those of the median voter. 
C) when a majority of voters have preferences different from those of the median voter. 
D) regardless of whether preferences among voters are similar or different from those of the median voter.

Question 17

Of the following sources of tax revenue for state and local governments, which was the smallest in 2016?

Accepted Answer

A) sales taxes 
B) the corporate income tax 
C) the property tax 
D) the individual income tax 
A) sales taxes 
B) the corporate income tax 
C) the property tax 
D) the individual income tax

Question 18

The public choice model assumes that government policymakers

Accepted Answer

A) must promote the public interest at the expense of their own self-interests in order to be re-elected. 
B) will pursue their self-interests in personal affairs but only if it does not conflict with the public interest. 
C) will often act irrationally in their personal affairs, but will act rationally when they promote the public interest. 
D) are likely to pursue their own self-interests, even if their self-interests conflict with the public interest. 
A) must promote the public interest at the expense of their own self-interests in order to be re-elected. 
B) will pursue their self-interests in personal affairs but only if it does not conflict with the public interest. 
C) will often act irrationally in their personal affairs, but will act rationally when they promote the public interest. 
D) are likely to pursue their own self-interests, even if their self-interests conflict with the public interest.

Question 19

Figure 18-1
  
-Refer to Figure 18-1.Of the tax revenue collected by the government, the portion borne by producers 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 20

The political process is more likely to serve the interests of individuals whose preferences are in the middle, rather than individuals with preferences that are much to the left or right of the political center.This statement is best explained by which of the following?

Accepted Answer

A) logrolling 
B) the voting paradox 
C) the Arrow impossibility theorem 
D) the median voter theorem 
A) logrolling 
B) the voting paradox 
C) the Arrow impossibility theorem 
D) the median voter theorem

The Gini coefficient for the United States in 1980 was 0.403.In 2016, the coefficient was equal to 0.481.This means that

Figure 18-7 Figure 18-7 shows the Lorenz curve for a hypothetical country. -Refer to Figure 18-7.The second lowest 20 percent of households

What is the relationship between market failure and government failure?

During the past 30 years, income inequality in the United States has increased in part due to rapid technological change.How does technological change contribute to income inequality?

Logrolling may result in

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold, the producer's burden of the tax

When the demand for a product is less elastic than the supply,

A key insight of the public choice model is that public policymakers are likely to pursue the public's interest, even if their self-interests conflict with the public interest.

A tax bracket is

The largest source of revenue for the federal government of the United States is from

If grocery stores were legally required to charge a 10-cent fee for disposable grocery bags, who would bear the largest burden of this fee?

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold, the consumer's burden of the tax

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.

The federal corporate income tax is

The median voter theorem will be an accurate predictor of the outcomes of elections

Of the following sources of tax revenue for state and local governments, which was the smallest in 2016?

The public choice model assumes that government policymakers

Figure 18-1 -Refer to Figure 18-1.Of the tax revenue collected by the government, the portion borne by producers is represented by the area

The political process is more likely to serve the interests of individuals whose preferences are in the middle, rather than individuals with preferences that are much to the left or right of the political center.This statement is best explained by which of the following?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Filters

Exam 18: Public Choice, Taxes, and the Distribution of Income

The Gini coefficient for the United States in 1980 was 0.403.In 2016, the coefficient was equal to 0.481.This means that

Figure 18-7 Figure 18-7 shows the Lorenz curve for a hypothetical country. -Refer to Figure 18-7.The second lowest 20 percent of households

What is the relationship between market failure and government failure?

During the past 30 years, income inequality in the United States has increased in part due to rapid technological change.How does technological change contribute to income inequality?

Logrolling may result in

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold, the producer's burden of the tax

When the demand for a product is less elastic than the supply,

A key insight of the public choice model is that public policymakers are likely to pursue the public's interest, even if their self-interests conflict with the public interest.

A tax bracket is

The largest source of revenue for the federal government of the United States is from

If grocery stores were legally required to charge a 10-cent fee for disposable grocery bags, who would bear the largest burden of this fee?

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold, the consumer's burden of the tax

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.

The federal corporate income tax is

The median voter theorem will be an accurate predictor of the outcomes of elections

Of the following sources of tax revenue for state and local governments, which was the smallest in 2016?

The public choice model assumes that government policymakers

Figure 18-1 -Refer to Figure 18-1.Of the tax revenue collected by the government, the portion borne by producers is represented by the area

The political process is more likely to serve the interests of individuals whose preferences are in the middle, rather than individuals with preferences that are much to the left or right of the political center.This statement is best explained by which of the following?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Filters