Q: Given a total taxable income of $$52,000 and a total tax paid of 8$$,363.29, what is the average tax rate? (Round to two decimal places)

$$ \frac{8,363.29}{52,000} \times 100 = 16.08\% $$

Question 1

Which of the following best describes an externality in the context of market failures?

Accepted Answer

A cost or benefit that spills over to third parties not involved in the transaction.

Question 2

Suppose a steel mill emits pollution that causes health problems for nearby residents. If the government imposes a pollution tax equal to the external cost, what is the expected effect on the market equilibrium?

Accepted Answer

The supply curve shifts left, equilibrium quantity decreases, and price increases.

Question 3

Which of the following is a characteristic of a public good?

Accepted Answer

It is non-excludible and non-rivalrous.

Question 4

The free-rider problem is most likely to occur with which type of good?

Accepted Answer

Public goods

Question 5

If a government bans the use of natural gas to address negative externalities, what is a likely market outcome for alternative energy sources?

Accepted Answer

A rightward shift in demand for alternatives, leading to higher prices.

Question 6

Which of the following is NOT an economic function of government?

Accepted Answer

Maximizing profits for private firms

Question 7

A government decides to subsidize vaccinations during a pandemic. What is the expected effect on the market for vaccinations?

Accepted Answer

The demand curve shifts right, equilibrium quantity and price increase.

Question 8

Which of the following best describes a progressive tax system?

Accepted Answer

Higher income individuals pay a higher percentage of their income in taxes.

Question 9

Given a total taxable income of $$52,000 and a total tax paid of 8$$,363.29, what is the average tax rate? (Round to two decimal places)

Accepted Answer

$$ \frac{8,363.29}{52,000} 	imes 100 = 16.08\% $$

Question 10

Which of the following is an example of a government-inhibited good?

Accepted Answer

Heroin

Question 11

If the marginal tax rate for an individual earning $125,000 is 26%, what does this mean?

Accepted Answer

The next dollar earned will be taxed at 26%.

Question 12

Which of the following is a transfer payment?

Accepted Answer

Old Age Security payments

Question 13

In the context of health care, what is a likely consequence of setting the price of medical services below equilibrium through government subsidies?

Accepted Answer

A shortage of medical services and increased wait times

Question 14

Which of the following best describes the government budget constraint?

Accepted Answer

Every dollar spent by the government must be funded by taxes, fees, or borrowing.

Question 15

Which of the following is an example of a regressive tax?

Accepted Answer

A tax where lower incomes pay a higher percentage of their income, such as GST

Question 16

Which of the following is NOT a method the government can use to correct for external benefits?

Accepted Answer

Special taxes

Question 17

If a good is rivalrous and excludible, it is classified as:

Accepted Answer

A private good

Question 18

Which of the following is a political function of government?

Accepted Answer

Redistributing income through transfer payments

Question 19

Which of the following best explains why the private sector has difficulty providing public goods?

Accepted Answer

Public goods are non-excludible and non-rivalrous, leading to the free-rider problem.

Question 20

Which of the following is an example of non-price rationing in a public health care system?

Accepted Answer

Increasing wait times for treatment

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