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ECO EXAM 3 Flashcards | StudBud
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ECO EXAM 3
ECO EXAM 3
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Answers
1
I should remember Coase theorem and how it plays a role in taxes and subsidies
False
True
2
In the minimum wage graph, the little triangle to the immediate left of the red line represents
deadweight loss
gains in income
uneployment
loss in income
3
In the graph pictured, the "B" box represents...
employee burden
employer burden
4
In a negative externality graph, deadweight loss falls between
marginal private benefit and marginal marginal external cost
marginal social cost and marginal private cost
marginal external cost and marginal private cost
5
Freeriders are the problem for goods with positive externalities
True
False
6
The Lorenz Curve represents
Income equality
Income inequality
7
Deadweight loss is a loss efficiency that occurs when the free market equilibrium is not efficiently achieved
True
False
8
As labor demand becomes more inelastic, deadweight loss becomes
stay the same
smaller
larger
9
Where is the freerider surplus fall on the graph for positive externalities?
between marginal social benefit curve and the marginal private cost
Between the marginal social benefit curve and the private equilibrium point
between the marginal external benefits and marginal social benefits
under the marginal external benefit curve
10
Raises in the minimum wage sparks an increase in the purchase of automated machines
False
True
11
The final sharing of a tax (burden split between employee and employer) is based on...
employee's bargaining leverage only
neither
bargaining leverage of employee and employer
employer bargaining leverage only
12
(from the last question) With the excess demand, sellers can increase their price in order to raise their profits again
True
False
13
People who tend to be unemployed are those with...
less experience
teenage boys
less education
all of the above
14
In the minimum wage graph, the box between "w" and "w1" represents
unemployement
losses in income
deadwight loss
gains in income
15
When there is a negative externality, and a tax is introduced to tax the seller, consumers usually create an
excess supply
greater marginal social cost
excess demand
more deadweight loss
16
U.S. economist tend to favor which government anti-poverty program?
subsidies (EITC)
minimum wage
17
What are the two qualities of a public good? (choose two)
cooperative in consumption
rival in consumption
inclusive supply
exclusive supply
18
Negative externalities push markets out of equilibrium so the government fixes them using...
taxes
subsidies
19
Which of the falling are reasons for the rampant witch trials in France
people were crazy
France had amazing court systems
France did not have proper financing in their court systems
France had an extremely high Fiscal capacity
20
Who gains bargaining power when there is excess demand for labor in a market?
employer
employee
entrepreneurs
government
21
Subsidies and taxes are both used to improve efficiency in markets with externalities
True
False
22
The unemployment rate for teenage males is high since they mature later than females
False
True
23
Positive externalities push markets out of equilibrium so the government fixes them using...
subsidies
taxes
24
Where does consumer surplus fall on the graph for a positive externality?
between marginal social benefit curve and the marginal private cost
between the marginal external benefits and marginal internal benefits curve
Between the marginal social benefit curve and the private equilibrium point
under the marginal external benefit curve
25
If the tax burden is shifted to the employee, they will want to work
fewer hours
the same amount of hours
more hours
26
In a positive externalities graph (subsidies), Marginal social cost=
marginal internal benefit+marginal external benefit
marginal internal cost+marginal private cost
marginal private cost+marginal external benefit
the area of the subsidy
27
If the employer pays any part of the tax, how does that affect the derived demand profit equation?
it stays the same
cost decreases
cost increases
price decreases
28
Who has the bargaining power with an inelastic labor demand
employees
employers
29
Subsidies increase supply of the final good, while minimum wage decreases the supply of the final good.
False
True
30
Unemployment rates decrese during times of economic uncertainty
True
False
31
Where does deadweight loss fall on a subsidy graph for positive externalities?
under the marginal external benefit curve
Between the marginal social benefit curve and the private equilibrium point
between marginal social benefit curve and the marginal private cost
between the marginal external benefits and marginal social benefits
32
I should be able to label everything (curves and areas within curves) on a positive and on a negative externality graph
True
False
33
On a tax on wages graph, you have a declining marginal revenue as you move...
across the demand curve
you never have declining marginal revenue
down the demand curve
up the demand curve
34
In the graph pictured, the "A" box represents...
employee burden
employer burden
35
In the graph pictured, the unlabeled triangle represents...
employer burden
nothing
employee burden
deadweight loss
36
How do employers "buy back" bargaining leverage from the employee
increase salary
bargaining leverage does not work
decrease salary
decrease hours worked
37
In a wage subsidy graph (pictured below) where does deadweight loss fall?
The triangle directly above the equilibrium point
The box above the equilibrium line
The box below the equilibrium line
The triangle to the right of the equilibrium point
38
With a subsidy introduced into the wage market, why does the wage the employer pays decrease (pictured below)?
excess supply
excess demand
39
Due to a negative externality tax seller's cost increases so they restrict supply (creating excess demand)
False
True
40
In the minimum wage graph, the triangle with the "e" inside of it represents
minimum wage
gains in income
unemployment
losses in income
