Sarah buys little stuffed animals for $5 each. They come in different varieties. If the producer stops making (retires) a certain variety, a stuffed animal of that variety will be worth $100; otherwise it is worth $0. There is 25% chance that any variety will be retired. For the purchase of an individual animal, what […]
Income taxes cause _____. a. individuals to substitute towards leisure b. individuals to substitute towards jobs with more in-kind benefits c. individuals to work in underground markets d. all of the above ANSWER d
Military force is most effective _____ a. when a country’s army has superior numbers b. when a country’s navy is superior c. if it causes the other side to back down d. if it causes the other side to waste resources ANSWER c
Suppose TC = 10 + (0.1 q2). If p = 10, the firm’s profit maximizing level of output is A) 40. B) 50. C) 60. D) 0, since the firm will shut down. ANSWER B
Imputed rental income ____. a. is payment made by rental owners to facility management companies b. provides no value to the recipient c. is the dollar amount of the rental value of an owner-occupied home d. is the dollar amount of the rental value of a renter-occupied home ANSWER c
The effectiveness of a country’s military expenditures depends on _____. a. how much other nations spend in response b. whether or not they are in an arms race c. whether they have effectively estimated demand for national defense d. depends on the size of a country ANSWER a
In most elections, _____ impedes political exchange a. low transactions costs b. uncertainty c. the secret ballot d. special interests ANSWER c
If the value of your baseball card collection increases during a year, it would count as income under which of the following definitions of income? a. The Fisher definition of income. b. The Haig-Simons definition of income. c. The Laffer definition of income. d. The imputed collectible return definition of income ANSWER d
Expected value represents the average of all outcomes if one were to undertake the risky event many times over and over again. What will be an ideal response? ANSWER True. The expected value is not expected on any one outcome, because it represents the average of many outcomes.
_____ is the exchange of political support on one issue for political support on another issue. a. Logrolling b. Market exchange c. Agenda control d. Rent seeking ANSWER a
