Which of the following often involves positive external benefits?
A) water pollution
B) drunken driving
C) inoculation programs
D) tobacco smoking
Ques. 2The average tax rate is defined as
A) total tax due/change in taxable income.
B) total tax due/total taxable income.
C) change in taxes due/change in taxable income.
D) change in taxes due/total taxable income.
Ques. 3Firms that produce 80 percent of all computer chips have shut down their facilities for maintenance. In the computer chip market this will lead to
A) an increase in price and a decrease in quantity.
B) an increase in price and an increase in quantity.
C) a decrease in price and a decrease in quantity.
D) a decrease in price and an increase in quantity.
Ques. 4For every choice a person makes it can be assumed that
A) the chooser has full knowledge of the situation.
B) some opportunity cost was involved.
C) there is a fifty-fifty chance the choice was the wrong one.
D) a good is involved and satisfaction is gained.
Ques. 5Suppose you have four choicesgo to a movie, read a book, watch television, or go to a concert. You choose to go to a movie. The opportunity cost of the movie is
A) the value of the book not read.
B) the value of the television program not watched.
C) the value of the concert that you didn't attend.
D) the value of the activity that you would have selected if you hadn't gone to the movie.
Ques. 6The market clearing price of computer modems has just decreased. Which of the following could have caused this change?
A) a decrease in supply at the same time that demand increases
B) an increase in supply at the same time that demand decreases
C) a decrease in supply with demand unchanged
D) an increase in demand with supply unchanged
Ques. 7Under a progressive income tax system, the marginal income tax rate paid by taxpayers
A) declines as their incomes increase.
B) rises as their incomes increase.
C) is unchanged as their incomes increase.
D) is unrelated to their incomes.
Ques. 8Self-interest relates to
A) only monetary objectives.
B) both monetary and nonmonetary objectives.
C) the ceteris paribus assumption.
D) normative economic analysis and not positive economic analysis.
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