Eco FINAL practice test

The amount of income tax owed by a family is:

More than the family’s total income

Equal to the family’s total income

Not simply proportionate to the family’s total income

In 2009, which category represented the largest category of spending for the U.S. federal government

Medicare
Social Security
National Defense
Net Interest

Which of the following is not correct
A gas tax can be an example of a tax that uses the benefits principle.
A progressive tax attempts to achieve vertical equity.
Progressive tax can be an example of the ability-to-pay principle.
A regressive tax attempts to achieve vertical equity.

The deadweight loss of an income tax is determined by the

A lump sum tax

Is most frequently used to tax real property
Does not distort incentives
Distorts incentives more than any other tax
Is the most fair tax

With a lump-sum tax, the

Marginal tax rate falls as income rises
Marginal tax rate rises as income rises
Marginal tax rate falls as income falls
Marginal tax rate rises as income falls

Under a progressive tax system, the marginal tax rate could be equal to the average tax rate only when a taxpayer

Fixed cost divided by quantity produced is

Economies of scale occur when

Short-run average total costs fall at a constant rate
Short-run average total costs rise at a constant rate
Long-run average total costs fall at a constant rate
Long-run average total costs rise at a constant rate

The production function exhibits diminishing marginal product when

The marginal product of an input declines as the quantity of that input rises
The marginal product of an input declines as the quantity of that input falls
The marginal product of an input rises as the quantity of that input rises
The marginal product of an input rises as the quantity of that input falls

In a competitive market

Which of the following best expresses a firm’s profit-maximizing decision?

If a firm operating in a competitive industry shuts down in the short run, it can avoid paying

Suppose that in a competitive market the equilibrium price is $3.  What is marginal revenue for the last unit sold by a typical firm in this market?

Which of the following is not a characteristic of a monopoly?

Barriers to entry
One seller
One buyer

Patent and copy right laws are major sources of

The deadweight loss occurs because the monopolist