01:220:102 Study Guide - Midterm Guide: Economic Surplus, Deadweight Loss, Tax Rate

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Published on 15 Oct 2018
School
Rutgers University
Department
Economic
Course
01:220:102
Professor
1
Name: ___________________________________ Date: ______________
1.
Increases in the price of the good measured on the vertical axis will make the vertical
intercept ________ and make the budget line ________.
A)
larger in value; steeper
B)
larger in value; flatter
C)
smaller in value; steeper
D)
smaller in value; flatter
2.
In the short run, as output gets larger and larger:
A)
fixed cost gets smaller.
B)
marginal cost gets smaller.
C)
average total cost decreases after the point of diminishing returns.
D)
the average variable cost curve gets closer and closer to the average total cost
curve.
Use the following to answer question 3:
Figure: The Market for Yachts
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2
3.
(Figure: The Market for Yachts) Look at the figure The Market for Yachts. If the
government imposes a $30,000 tax on yachts (collected from the producers), consumers
will pay ________ of the tax and producers will pay ________.
A)
$20,000; $10,000
B)
$5,000; $25,000
C)
$15,000; $15,000
D)
$10,000; $20,000
4.
The cost of a tax is equal to
A)
the tax revenue raised by the tax.
B)
the tax revenue raised by the tax, plus the deadweight loss associated with the tax,
plus whatever administrative costs that compliance with the tax incurs.
C)
the tax revenue raised by the tax plus the deadweight loss associated with the tax.
D)
the deadweight loss associated with the tax and the administrative costs that
compliance with the tax entails.
Use the following to answer question 5:
5.
(Total Product and Marginal Product) Look at the table Total Product and Marginal
Product. Negative marginal returns begin when the ________ worker is added.
A)
eighth
B)
fifth
C)
seventh
D)
sixth
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3
6.
The total product curve:
A)
will become flatter as output increases if there are diminishing returns to the
variable input.
B)
will become horizontal when the marginal product of the variable input is constant.
C)
will be downward sloping if there are diminishing returns to the variable input.
D)
shows the relation between output and the quantity of a variable input for varying
levels of the fixed input.
Use the following to answer question 7:
Figure: The Market for Blue Jeans
7.
(Figure: The Market for Blue Jeans) Look at the figure The Market for Blue Jeans. The
government recently levied a $10 tax on the producers of blue jeans. What area or areas
in the graph identify the loss of consumer surplus due to the tax?
A)
c
B)
a + b + c
C)
b + c
D)
b
8.
Taxation according to the ability-to-pay principle is best illustrated in the United States
by:
A)
gasoline taxes.
B)
excise taxes.
C)
personal income taxes.
D)
sales taxes.
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Document Summary

1: (figure: the market for yachts) look at the figure the market for yachts. Use the following to answer question 5: (total product and marginal product) look at the table total product and marginal. Negative marginal returns begin when the ________ worker is added: eighth, seventh, sixth fifth. Figure: the market for blue jeans: (figure: the market for blue jeans) look at the figure the market for blue jeans. The government recently levied a tax on the producers of blue jeans. Figure and table: an indifference curve map: (figure and table: indifference curve map) look at the figure an indifference curve. Which of the following statements is true: combination a is preferred to combination b, combination b is preferred to combination d, combination c is preferred to combination a, combination b is preferred to combination c. 4: (table: three tax structure proposals) look at the table three tax structure proposals.