Many small governments provide more utility to individuals than one large government in most cases because _____. a. individuals have heterogeneous preferences and can move to an area that suits their taste for government b. individuals have homogeneous preferences and can move to an area that suits their taste for government c. the optimal sharing […]
Special districts are often set up among small governments to deal with _____. a. externalities internalized within a governments borders b. externalities that spill across borders c. free-riding problems concerning public goods d. unhealthy competition among local governments ANSWER b
Ad valorem taxes _____. a. are based on the dollar value of the good b. are based on the number of units sold c. are taxes on advertising d. b and c ANSWER a
The 1964 tax reform was designed to _____. a. simplify the tax structure b. remove the bias towards consumption in the tax code c. cut marginal tax rates in order to increase aggregate demand d. cut average tax rates in order to decrease aggregate demand ANSWER c
A firm engaging in efficient production, using current technology, ________ produce its current level of production with ________ inputs. A) could; fewer B) cannot; fewer C) cannot, more D) cannot; different ANSWER B
Excise taxes _____. a. can be ad valorem taxes b. can be unit taxes c. are taxes placed on particular types of goods d. all of the above e. b and c ANSWER d
A firm is currently producing1140 units of output according to the production function q = L4/3K1/2 and faces input prices equal to w = $20 and r = $80. In the short run, capital is fixed at 5 units. In the long run, the firm’s costs are A) lower because the firm substitutes towards more […]
The primary concern of the 1964 tax reform was _____. a. fiscal stabilization b. macroeconomic policy c. equity considerations d. efficiency considerations ANSWER b
Which of the following did the 1986 Tax Reform Act not intended to do? a. lower marginal tax rates b. broaden the tax base c. keep average tax rates the same d. reduce the bias towards saving ANSWER d
Different public goods can have different sized sharing groups, so efficiency would dictate _____. a. that only one national government is necessary b. that public goods be provided by the federal government and the states deal with externalities c. one world government for most pure public goods d. different public goods supplied at different levels […]
