Suppose that a per-unit subsidy is granted to each individual who consumes a product providing external benefits to society at large. Each individuals demand curve will shift ________, and the market demand curve for the product will shift ________.
A) to the right; to the right
B) to the right; to the left
C) to the left; to the left
D) to the left; to the right
Ques. 2Using the above figure, which of the lines in the above diagram represents a proportional tax?
A) A
B) B
C) C
D) none of them
Ques. 3Incentives are
A) potential rewards available if a particular activity is undertaken.
B) ineffective as a device to get people to behave in a certain fashion.
C) inappropriate ways to obtain a certain kind of behavior.
D) useless when people behave rationally.
Ques. 4Jamal earns 160,000 per year and Josephina earns 80,000 per year. If Jamal pays 16,000 in income taxes and Josephina pays 8,000 in income taxes, the income tax system would be
A) regressive.
B) progressive.
C) proportional.
D) marginal.
Ques. 5Refer to the above table. What is the market quantity demanded of DVDs at a price of 12?
A) 6
B) 9
C) 12
D) 24
Ques. 6A possible rational reason why older people, on average, show less interest in learning how to use new technologies is because
A) older people are not as smart as (today's) young people.
B) they are acting irrationally.
C) they have fewer years to gain a return from learning how to use new technologies.
D) the financial cost for older people is greater than the cost to younger people.
Ques. 7In the automobile industry, workers have just negotiated a new contract giving workers a large raise. There has also been an increase in the number of licensed drivers who are in the market for a new car.
In the market for new automobiles, the effects that these changes will have on the equilibrium price and quantity are A) price will increase, and quantity will decrease.
B) price will increase, and the effect on quantity is indeterminate.
C) price will decrease, and quantity will increase.
D) price will decrease, and the effect on quantity is indeterminate.
Ques. 8Opportunity cost exists because
A) of scarcity.
B) prices must adjust to eliminate shortages.
C) production could not occur without the opportunity cost of using resources.
D) the value of economic goods is positive while the value of goods is zero.
Ques. 9More farmers have recently entered the corn industry. In addition there has been a technological advancement in the fertilizer industry providing corn farmers with a cheaper and a more effective fertilizer.
In the market for corn, the effects these changes will have on the equilibrium price and quantity are A) price will increase, and quantity will decrease.
B) price will increase, and the effect on quantity is indeterminate.
C) price will decrease, and quantity will increase.
D) price will decrease, and the effect on quantity is indeterminate.
Ques. 10Jose is rational if he
A) does not intentionally make decisions that would leave him worse off.
B) never makes a mistake in his life.
C) only responds to rewards that involve money.
D) always uses a model or mathematical formula to help him make a decision.
Ques. 11According to the above figure, if steel mills are charged an effluent fee in order to bear the cost of pollution, what happens to the equilibrium price and equilibrium quantity?
A) They are unchanged.
B) They change from P1 and Q1 to P2 and Q2.
C) They change from P2 and Q2 to P1 and Q1.
D) The equilibrium price increases from P1 and P2, but the equilibrium quantity is unchanged.
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