Question 1

It is the _______ that matter(s) in evaluating whether a tax is regressive, proportional, or progressive.

Accepted Answer

A)  incidence 
B)  principle 
C)  payer of the tax 
D)  amount 
A)  incidence 
B)  principle 
C)  payer of the tax 
D)  amount

Question 2

A public good is a good:

Accepted Answer

A)  for which exclusion is prohibitively costly. 
B)  for which the marginal cost of adding another consumer is high. 
C)  that the market will usually provide efficiently. 
D)  for which exclusion is possible. 
A)  for which exclusion is prohibitively costly. 
B)  for which the marginal cost of adding another consumer is high. 
C)  that the market will usually provide efficiently. 
D)  for which exclusion is possible.

Question 3

A public good is an example of a good that the market may fail to provide efficiently.

Accepted Answer

A) True 
 B)False

Question 4

If the benefits of a public good exceed its costs:

Accepted Answer

A)  the market can still provide efficiently if the firm is a price setter. 
B)  government agencies may either produce the good themselves or pay private firms to produce it. 
C)  people really don't value the good. 
D)  the free-rider notion does not apply. 
A)  the market can still provide efficiently if the firm is a price setter. 
B)  government agencies may either produce the good themselves or pay private firms to produce it. 
C)  people really don't value the good. 
D)  the free-rider notion does not apply.

Question 5

Progressive taxes fall more heavily on lower-income groups than either proportional or regressive taxes.

Accepted Answer

A) True 
 B)False

Question 6

When external benefits are involved, too much is produced by unregulated private markets.

Accepted Answer

A) True 
 B)False

Question 7

Social Security payments to retired persons are an example of a means-tested transfer payment.

Accepted Answer

A) True 
 B)False

Question 8

External costs are a problem that often suggests government action because the external costs are not included in the market price of a good.

Accepted Answer

A) True 
 B)False

Question 9

Firms that supply a good in a perfectly competitive product market will produce more of the good than is efficient.

Accepted Answer

A) True 
 B)False

Question 10

Public goods may be efficiently provided if they are financed through:

Accepted Answer

A)  license fees. 
B)  user charges. 
C)  government tax revenues. 
D)  market exchange. 
A)  license fees. 
B)  user charges. 
C)  government tax revenues. 
D)  market exchange.

Question 11

Use the following to answer question(s): Market Failure
  
-(Exhibit: Market Failure) If the market produces quantity E, then:

Accepted Answer

A)  marginal benefit is equal to marginal cost. 
B)  marginal benefit is less than marginal cost. 
C)  marginal benefit is greater than marginal cost. 
D)  price is equal to marginal cost and greater than marginal benefit. 
A)  marginal benefit is equal to marginal cost. 
B)  marginal benefit is less than marginal cost. 
C)  marginal benefit is greater than marginal cost. 
D)  price is equal to marginal cost and greater than marginal benefit.

Question 12

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.Economists argue that in an unregulated private market _______ is produced and the supply curve (S₁) reflects ________ cost.

Accepted Answer

A)  too little; private 
B)  too much; private 
C)  too much; external 
D)  too little; external and private 
A)  too little; private 
B)  too much; private 
C)  too much; external 
D)  too little; external and private

Question 13

A regressive tax is one that takes a lower percentage of income as income rises.

Accepted Answer

A) True 
 B)False

Question 14

The following statement is attributed to Justice Oliver Wendell Holmes: "Taxes are what we pay for a civilized society." Do you agree or disagree with his statement? Why or why not? What do you consider to be the most relevant considerations involved in evaluating this statement?

Accepted Answer

I agree with Justice Oliver Wendell Holm

Question 15

Use the following to answer question(s): Correcting for Market Failure: Imperfect Competition
  
-(Exhibit: Correcting for Market Failure: Imperfect Competition) Before any attempt to intervene to reduce the inefficiency associated with the imperfectly competitive market shown in this exhibit, the equilibrium price is _______ and the equilibrium output is ________ .

Accepted Answer

A)  Pᵥ; W 
B)  Pᵤ; R 
C)  Pᵤ; W 
D)  Pᵥ; R 
A)  Pᵥ; W 
B)  Pᵤ; R 
C)  Pᵤ; W 
D)  Pᵥ; R

Question 16

The assumption that the goal of government is to maximize welfare by seeking an efficient allocation of resources is characteristic of the _______ approach to studying public sector choice.

Accepted Answer

A)  federal budget studies 
B)  government spending theory 
C)  public choice theory 
D)  public interest theory 
A)  federal budget studies 
B)  government spending theory 
C)  public choice theory 
D)  public interest theory

Question 17

Use the following to answer question(s): Correcting for Market Failure: Imperfect Competition
  
-(Exhibit: Correcting for Market Failure: Imperfect Competition) In this exhibit showing market failure, there is a(n) _______ competitive firm producing an output of ________.

Accepted Answer

A)  perfectly; W 
B)  imperfectly; W 
C)  imperfectly; R 
D)  perfectly; R 
A)  perfectly; W 
B)  imperfectly; W 
C)  imperfectly; R 
D)  perfectly; R

Question 18

Transfer payments represent:

Accepted Answer

A)  government expenditures. 
B)  government purchases. 
C)  payments made to the government by individuals. 
D)  government tax receipts. 
A)  government expenditures. 
B)  government purchases. 
C)  payments made to the government by individuals. 
D)  government tax receipts.

Question 19

Public finance is the study of government expenditures and tax policy and their impact on the economy.

Accepted Answer

A) True 
 B)False

Question 20

Use the following to answer question(s): Correcting for Market Failure: A Public Good
  
-(Exhibit: Correcting for Market Failure: A Public Good) A private market produces R units of output of a public good.If the government intervenes to correct for market failure to provide the efficient level of a public good, the additional total cost is:

Accepted Answer

A)  RTVW. 
B)  RUVW. 
C)  WVKX. 
D)  TUV. 
A)  RTVW. 
B)  RUVW. 
C)  WVKX. 
D)  TUV.

It is the _______ that matter(s) in evaluating whether a tax is regressive, proportional, or progressive.

A public good is a good:

A public good is an example of a good that the market may fail to provide efficiently.

If the benefits of a public good exceed its costs:

Progressive taxes fall more heavily on lower-income groups than either proportional or regressive taxes.

When external benefits are involved, too much is produced by unregulated private markets.

Social Security payments to retired persons are an example of a means-tested transfer payment.

External costs are a problem that often suggests government action because the external costs are not included in the market price of a good.

Firms that supply a good in a perfectly competitive product market will produce more of the good than is efficient.

Public goods may be efficiently provided if they are financed through:

Use the following to answer question(s): Market Failure -(Exhibit: Market Failure) If the market produces quantity E, then:

A regressive tax is one that takes a lower percentage of income as income rises.

The following statement is attributed to Justice Oliver Wendell Holmes: "Taxes are what we pay for a civilized society." Do you agree or disagree with his statement? Why or why not? What do you consider to be the most relevant considerations involved in evaluating this statement?

The assumption that the goal of government is to maximize welfare by seeking an efficient allocation of resources is characteristic of the _______ approach to studying public sector choice.

Use the following to answer question(s): Correcting for Market Failure: Imperfect Competition -(Exhibit: Correcting for Market Failure: Imperfect Competition) In this exhibit showing market failure, there is a(n) _ competitive firm producing an output of __.

Transfer payments represent:

Public finance is the study of government expenditures and tax policy and their impact on the economy.

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

It is the _______ that matter(s) in evaluating whether a tax is regressive, proportional, or progressive.

A public good is a good:

A public good is an example of a good that the market may fail to provide efficiently.

If the benefits of a public good exceed its costs:

Progressive taxes fall more heavily on lower-income groups than either proportional or regressive taxes.

When external benefits are involved, too much is produced by unregulated private markets.

Social Security payments to retired persons are an example of a means-tested transfer payment.

External costs are a problem that often suggests government action because the external costs are not included in the market price of a good.

Firms that supply a good in a perfectly competitive product market will produce more of the good than is efficient.

Public goods may be efficiently provided if they are financed through:

Use the following to answer question(s): Market Failure -(Exhibit: Market Failure) If the market produces quantity E, then:

A regressive tax is one that takes a lower percentage of income as income rises.

The following statement is attributed to Justice Oliver Wendell Holmes: "Taxes are what we pay for a civilized society." Do you agree or disagree with his statement? Why or why not? What do you consider to be the most relevant considerations involved in evaluating this statement?

The assumption that the goal of government is to maximize welfare by seeking an efficient allocation of resources is characteristic of the _______ approach to studying public sector choice.

Use the following to answer question(s): Correcting for Market Failure: Imperfect Competition -(Exhibit: Correcting for Market Failure: Imperfect Competition) In this exhibit showing market failure, there is a(n) _______ competitive firm producing an output of ________.

Transfer payments represent:

Public finance is the study of government expenditures and tax policy and their impact on the economy.

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

Use the following to answer question(s): Correcting for Market Failure: Imperfect Competition -(Exhibit: Correcting for Market Failure: Imperfect Competition) In this exhibit showing market failure, there is a(n) _ competitive firm producing an output of __.