Katy has an ailing and wealthy, but miserly, parent. The parent has told Katy that if she takes care of him until he dies, then she will get 100,000 in inheritance.
Katy knows that there is only a 50-50 chance that her father will leave her the full amount or nothing. To take care of her father, she has to take a job that pays 30,000 where her current job pays her 70,000 per year. If her father is expected to pass away in 1 year, what is Katy's expected wealth if she takes care of her father? A) 130,000
B) 90,000
C) 80,000
D) 70,000
Ques. 2An income tax for which the average tax rate is constant called a
A) regressive income tax.
B) proportional income tax.
C) marginal income tax.
D) progressive income tax.
Ques. 3Tom's marginal utility of Mountain Dew exceeds his marginal utility of crackers at his consumer equilibrium. Therefore, his consumer surplus from Mountain Dew must exceed his consumer surplus from crackers.
Indicate whether the statement is true or false
Ques. 4Higher ethanol production definitely and directly raises the price of corn, said USDA economist Ephraim Leibtag. In the short run, what is TRUE if the production of ethanol increases?
A) The demand for corn will increase.
B) The supply of ethanol will decrease.
C) The supply of corn will increase.
D) The demand for ethanol will increase.
Ques. 5A bilateral monopoly is a
A) firm that is a monopsony in a resource market and a monopoly in a product market.
B) firm that is a monopoly in two product markets.
C) market in which a monopoly discriminates, setting a higher price for affluent customers.
D) market in which a monopsony bargains with a monopoly.
Ques. 6If the monopoly illustrated in the figure above could engage in perfect price discrimination, the deadweight loss would be
A) 0.
B) 22.50.
C) 90.00.
D) 250.00.
Ques. 7La Super Rica is a taco stand in Santa Barbara, California. It is popular with the locals and even the late Julia Child found the food delicious.
If La Super Rica is currently producing where marginal revenue is greater than marginal cost, to increase its profit La Super Rica should A) increase production.
B) decrease production.
C) not change its production because it is maximizing its profit.
D) Not enough information is given to determine what La Super Rica should do.
Ques. 8When people determine the quantity of education they will undertake, they ________ the external benefits. As a result, if education were left to an unregulated market, people would undertake too ________ education.
A) overvalue; much
B) ignore; much
C) ignore; little
D) overvalue; little
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