Assuming that we can properly measure ability to pay, how do we use the principle of vertical equity to determine how much someone with greater ability to pay should pay in taxes? a. By integrating it with the principle of horizontal equity. b. Through reference to the benefit principle. c. By looking at elasticities of […]
Consumers do not prefer gifts-in-kind to cash gifts. What will be an ideal response? ANSWER True. It is possible the consumer would buy the same gift with cash and therefore be just as well off. If the consumer bought something other than the gift, that means that this something else is preferred to the […]
Which of the following is not a common rationale for government involvement in education? a. Public education produces a positive inframarginal externality. b. Public provisions of education makes students into better citizens. c. Public financing of education is necessary on equity grounds. d. all of the above ANSWER d
With a unanimity decision-making rule, external costs are _____. a. zero b. indeterminate c. high d. minimized ANSWER a
A tax that that takes the same percentage of a taxpayer’s income regardless no matter what their total income is called a _____. a. proportional tax b. progressive tax c. head tax d. regressive tax ANSWER a
In 1952, there were _____ school districts in the United States. a. fewer than 15,000 b. around 30,000 c. around 45,000 d. more than 60,000 ANSWER d
In 2002, there were _____ school districts in the United States. a. fewer than 15,000 b. around 30,000 c. around 45,000 d. more than 60,000 ANSWER a
Suppose Joe’s utility for lobster (L) and soda (S) can be represented as U = L0.5 S0.5. Joe walks into a restaurant with $72. Lobsters cost $18 each and sodas cost $2 each. How much lobster and soda will Joe consume if he intends to spend all his money? (There are no tax and no […]
A tax that taxes a larger percentage of an individual’s income as their income rises is called a _____. a. proportional tax b. progressive tax c. head tax d. regressive tax ANSWER b
The optimal collective decision rule is found where _____. a. decision-making costs are minimized b. the sum of the external and decision-making costs are minimized c. marginal political costs and marginal political benefits are equalized d. external costs are minimized ANSWER b
