Question 1

A charge levied on consumers of government-provided services is a(n):

Accepted Answer

A)  income tax. 
B)  tariff. 
C)  sales tax. 
D)  user fee. 
A)  income tax. 
B)  tariff. 
C)  sales tax. 
D)  user fee.

Question 2

If the purpose of taxation is to raise revenue, would it be better for the government to levy taxes on products whose demand is elastic or inelastic? Explain.Are there any other reasons why governments levy taxes? Explain.

Accepted Answer

If the purpose of taxation is to raise r

Question 3

The presence of external benefits may result in government action because the external benefits are not included in the market price of a good.

Accepted Answer

A) True 
 B)False

Question 4

Rational abstention is the:

Accepted Answer

A)  decision to become informed about public issues even if the marginal cost of obtaining information is greater than the marginal benefit. 
B)  decision not to vote in an election because the marginal cost is greater than the marginal benefit. 
C)  production of goods that are not subject to the exclusion principle and are nonrival in consumption. 
D)  efforts by individuals or firms to receive benefits, usually through political means, that they would not otherwise receive. 
A)  decision to become informed about public issues even if the marginal cost of obtaining information is greater than the marginal benefit. 
B)  decision not to vote in an election because the marginal cost is greater than the marginal benefit. 
C)  production of goods that are not subject to the exclusion principle and are nonrival in consumption. 
D)  efforts by individuals or firms to receive benefits, usually through political means, that they would not otherwise receive.

Question 5

If the marginal benefit received from a good is less than the marginal opportunity cost of production, then:

Accepted Answer

A)  society's well-being can be improved if production increases. 
B)  society's well-being cannot be improved by changing production. 
C)  the market is producing too much of the good. 
D)  the market is producing too little of the good. 
A)  society's well-being can be improved if production increases. 
B)  society's well-being cannot be improved by changing production. 
C)  the market is producing too much of the good. 
D)  the market is producing too little of the good.

Question 6

A ______ transfer payment is one for which the recipient qualifies on the basis of ________.

Accepted Answer

A)  non-means-tested; income 
B)  means-tested; need 
C)  means-tested; income 
D)  non-means-tested; need 
A)  non-means-tested; income 
B)  means-tested; need 
C)  means-tested; income 
D)  non-means-tested; need

Question 7

Taxes paid on the purchase of specific items such as gasoline, cigarettes, or alcoholic beverages would fall into the category of:

Accepted Answer

A)  personal income tax. 
B)  excise tax. 
C)  property tax. 
D)  sales tax. 
A)  personal income tax. 
B)  excise tax. 
C)  property tax. 
D)  sales tax.

Question 8

The U.S.tax system is extremely regressive.

Accepted Answer

A) True 
 B)False

Question 9

Taxation according to the benefits-received principle is best illustrated by the:

Accepted Answer

A)  income tax. 
B)  sales tax. 
C)  gift tax. 
D)  gasoline tax. 
A)  income tax. 
B)  sales tax. 
C)  gift tax. 
D)  gasoline tax.

Question 10

The primary source of the difference between government purchases and government expenditures is:

Accepted Answer

A)  the government deficit. 
B)  the government surplus. 
C)  transfer payments. 
D)  the revenue gap. 
A)  the government deficit. 
B)  the government surplus. 
C)  transfer payments. 
D)  the revenue gap.

Question 11

According to public choice theory, special-interest groups are not a problem for efficient government.

Accepted Answer

A) True 
 B)False

Question 12

A tax that takes a fixed percentage of income, regardless of the level of income, is a(n):

Accepted Answer

A)  proportional tax. 
B)  benefits tax. 
C)  progressive tax. 
D)  regressive tax. 
A)  proportional tax. 
B)  benefits tax. 
C)  progressive tax. 
D)  regressive tax.

Question 13

The rate that would apply to an additional $1 of taxable income received by a taxpayer is the:

Accepted Answer

A)  marginal tax rate. 
B)  average tax rate. 
C)  total tax rate. 
D)  lower tax rate. 
A)  marginal tax rate. 
B)  average tax rate. 
C)  total tax rate. 
D)  lower tax rate.

Question 14

It would always be irrational for eligible voters to:

Accepted Answer

A)  vote. 
B)  abstain from voting. 
C)  be ignorant about policy issues. 
D)  ignore their utility functions and alternatives. 
A)  vote. 
B)  abstain from voting. 
C)  be ignorant about policy issues. 
D)  ignore their utility functions and alternatives.

Question 15

In the case of a public good:

Accepted Answer

A)  a consumer could be a free rider. 
B)  firms get a signal that fully reflects benefits received by consumers. 
C)  firms will get signals to produce more than is economically efficient. 
D)  it is quite costly to add consumers. 
A)  a consumer could be a free rider. 
B)  firms get a signal that fully reflects benefits received by consumers. 
C)  firms will get signals to produce more than is economically efficient. 
D)  it is quite costly to add consumers.

Question 16

Public goods are distinguished from private goods in that nonpayers cannot be excluded from benefiting from public goods.

Accepted Answer

A) True 
 B)False

Question 17

A tax that takes a higher percentage of income as income rises is a(n):

Accepted Answer

A)  proportional tax. 
B)  ability tax. 
C)  progressive tax. 
D)  regressive tax. 
A)  proportional tax. 
B)  ability tax. 
C)  progressive tax. 
D)  regressive tax.

Question 18

The theory that assumes that the role of government is to maximize welfare by seeking an efficient allocation of resources is called public choice theory.

Accepted Answer

A) True 
 B)False

Question 19

Use the following to answer question(s): Correcting for Market Failure: External Cost
  
-(Exhibit: Correcting for Market Failure: External Cost) Assume that there is an external cost involved, as illustrated in the exhibit.If the government intervenes to correct for the external cost, the new _______ will now reflect _______ and _______ cost.

Accepted Answer

A)  supply curve S₁; private; external 
B)  supply curve S₂; private; no external 
C)  supply curve S₂; private; external 
D)  demand curve (not shown); external; no private 
A)  supply curve S₁; private; external 
B)  supply curve S₂; private; no external 
C)  supply curve S₂; private; external 
D)  demand curve (not shown); external; no private

Question 20

For a public good, nonpayers _______ excluded from obtaining the benefits of the good.

Accepted Answer

A)  can be 
B)  are automatically 
C)  usually are 
D)  cannot be 
A)  can be 
B)  are automatically 
C)  usually are 
D)  cannot be

A charge levied on consumers of government-provided services is a(n):

If the purpose of taxation is to raise revenue, would it be better for the government to levy taxes on products whose demand is elastic or inelastic? Explain.Are there any other reasons why governments levy taxes? Explain.

The presence of external benefits may result in government action because the external benefits are not included in the market price of a good.

Rational abstention is the:

If the marginal benefit received from a good is less than the marginal opportunity cost of production, then:

A transfer payment is one for which the recipient qualifies on the basis of __.

Taxes paid on the purchase of specific items such as gasoline, cigarettes, or alcoholic beverages would fall into the category of:

The U.S.tax system is extremely regressive.

Taxation according to the benefits-received principle is best illustrated by the:

The primary source of the difference between government purchases and government expenditures is:

According to public choice theory, special-interest groups are not a problem for efficient government.

A tax that takes a fixed percentage of income, regardless of the level of income, is a(n):

The rate that would apply to an additional $1 of taxable income received by a taxpayer is the:

It would always be irrational for eligible voters to:

In the case of a public good:

Public goods are distinguished from private goods in that nonpayers cannot be excluded from benefiting from public goods.

A tax that takes a higher percentage of income as income rises is a(n):

The theory that assumes that the role of government is to maximize welfare by seeking an efficient allocation of resources is called public choice theory.

For a public good, nonpayers _______ excluded from obtaining the benefits of the good.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 15: Public Finance and Public Choice

A charge levied on consumers of government-provided services is a(n):

If the purpose of taxation is to raise revenue, would it be better for the government to levy taxes on products whose demand is elastic or inelastic? Explain.Are there any other reasons why governments levy taxes? Explain.

The presence of external benefits may result in government action because the external benefits are not included in the market price of a good.

Rational abstention is the:

If the marginal benefit received from a good is less than the marginal opportunity cost of production, then:

A ______ transfer payment is one for which the recipient qualifies on the basis of ________.

Taxes paid on the purchase of specific items such as gasoline, cigarettes, or alcoholic beverages would fall into the category of:

The U.S.tax system is extremely regressive.

Taxation according to the benefits-received principle is best illustrated by the:

The primary source of the difference between government purchases and government expenditures is:

According to public choice theory, special-interest groups are not a problem for efficient government.

A tax that takes a fixed percentage of income, regardless of the level of income, is a(n):

The rate that would apply to an additional $1 of taxable income received by a taxpayer is the:

It would always be irrational for eligible voters to:

In the case of a public good:

Public goods are distinguished from private goods in that nonpayers cannot be excluded from benefiting from public goods.

A tax that takes a higher percentage of income as income rises is a(n):

The theory that assumes that the role of government is to maximize welfare by seeking an efficient allocation of resources is called public choice theory.

For a public good, nonpayers _______ excluded from obtaining the benefits of the good.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

A transfer payment is one for which the recipient qualifies on the basis of __.