The table above shows the distribution of income in Swacko. The government of Swacko imposes a 20 percent tax on the people with the highest 40 percent of income.
The government then distributes 50 percent of the tax collected to the lowest 20 percent and 25 percent to the second 20 percent and the middle 20 percent. Suppose that the before-tax group incomes remain as above. Before and after the distribution, what percentage of national income belongs to the lowest 20 percent? A) 2 percent; 10 percent
B) 20 percent; 20 percent
C) 5 percent; 25 percent
D) 2 percent; 2 percent
Ques. 2The table above shows the marginal costs and marginal benefits of college education. If 8 million students are enrolled, the marginal external benefit is
A) zero.
B) 4,000.
C) 5,000.
D) 7,000.
Ques. 3A natural monopoly that is regulated to set its price equal to its marginal cost
A) incurs an economic loss.
B) makes zero economic profit.
C) makes an economic profit.
D) creates the maximum deadweight loss.
Ques. 4Wendy works as a teller at a bank for a fixed salary of 1,800 per month. She is offered a job as a salesperson at which there is a 40 percent chance that she will make 5,000 a month and a 60 percent chance that she will make only 1,000 a month.
The figure shows Wendy's utility of wealth curve: a) What is Wendy's expected income from the offered job? b) What is Wendy's expected utility from the offered job? c) Will Wendy accept the offer? Why or why not? d) What is the minimum fixed salary for which Wendy will continue to work for the bank and not take the sales job?
Ques. 5In the long run, firms in monopolistic competition become price takers.
Indicate whether the statement is true or false
Ques. 6According to the table above, the money income distribution is ________ unequal than the market income distribution because ________ income reflects income redistribution through taxes and benefits.
A) less; money
B) less; market
C) more; money
D) more; market
Ques. 7In the above figure, between 5 and 10 units per hour, the firm experiences
A) economies of scale.
B) diseconomies of scale.
C) constant returns to scale.
D) decreasing total fixed costs.
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