A tax system that applies a lower marginal tax rate at higher levels of income is
A) progressive.
B) regressive.
C) proportional.
D) backward.
Ques. 2Which of the following is an example of a negative externality?
A) There is an increase in injuries to pedestrians caused by accidents resulting from electronic billboards distracting drivers.
B) The opening of a new shopping mall increases the business of nearby restaurants.
C) A consumer pays a higher price than another consumer does for the same product.
D) Consumers pay a sales tax in addition to the price of a product.
Ques. 3The price of labor in the agricultural industry has just increased. For agricultural products, 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. 4A schedule of how much of a good people will purchase for a range of possible prices during a specified time period, other things constant, is the definition of
A) supply.
B) demand.
C) a purchasing contract.
D) an economic market.
Ques. 5Gasoline prices in the United States decreased significantly between 2008 and 2009. A decrease in the price of gasoline, holding other things constant, will cause which of the following to occur?
A) increase the demand for gasoline.
B) decrease the demand for gasoline.
C) increase the quantity of gasoline demanded.
D) decrease the quantity of gasoline demanded.
Ques. 6In a proportional income tax system
A) marginal tax rates are the same regardless of the level of taxable income.
B) marginal tax rates increase as the level of taxable income increases.
C) marginal tax rates decline as the level of taxable income declines.
D) everyone pays the same dollar amount in taxes.
Ques. 7Sara looks into her closet and discovers a pair of like-new shoes she no longer wears because they give her blisters. From the economist's perspective, was Sara behaving rationally when she bought those shoes?
A) No. If any of a person's decisions have poor results, that person is irrational.
B) Yes, as long as Sara didn't intentionally purchase blister-causing shoes.
C) No. The rationality assumption states that rational people never make mistakes.
D) It's not clear because psychology, not economics, deals with the rationality assumption.
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