In the figure above, the poorest 40 percent of households receive ________ of total income.
A) 20 percent
B) 10 percent
C) 30 percent
D) 15 percent
Ques. 2Tom and Jerry are the only members of society. The table above shows their marginal benefits from defense satellites, a public good. What is the marginal benefit to society from the fourth satellite?
A) 36
B) 20
C) 18
D) 4
Ques. 3Indifference curves are drawn on a diagram with the
A) price of a good on the vertical axis and its quantity on the horizontal axis.
B) price of one good on the vertical axis and the price of another good on the horizontal axis.
C) quantity of a good on the vertical axis and its price on the horizontal axis.
D) quantity of one good on the vertical axis and the quantity of another good on the horizontal axis.
Ques. 4Which of the following is NOT an assumption of marginal utility theory?
A) People derive utility from their consumption.
B) More consumption yields more total utility.
C) Marginal utility diminishes with more consumption.
D) Utility can be measured and the units of utility are precisely defined.
Ques. 5Which of the following arguments support the proposition that society should accept at least some income inequality?
A) Income redistribution will require taxation, causing inefficiently low levels of labor supply and saving, thus decreasing the size of the economic pie.
B) Administrative costs associated with income redistribution imply that low-income people receive less than 1 for each dollar taken from high-income people.
C) Income redistribution programs divert skilled labor and capital to tax compliance activities and away from production of goods and services that people value.
D) All of the above answers are correct because all support the proposition that society should accept some income inequality.
Ques. 6In the figure above, Gap maximizes its profit if it charges ________ per jacket.
A) 100
B) 95
C) 75
D) 120
Ques. 7A perfectly competitive firm will have an economic profit of zero if, at its profit-maximizing output, its marginal revenue equals its
A) average total cost.
B) marginal cost.
C) average variable cost.
D) average fixed cost.
Ques. 8The cost of risk is the amount by which expected wealth must increase to give the same ________ as a no-risk situation.
A) marginal wealth
B) marginal utility
C) expected utility
D) expected wealth
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