Question 1

A merit good is

Accepted Answer

A)   Income payments for which no goods or services are exchanged.
B)   A good society holds to a higher standard in tax regulations.
C)   A good or service that society believes everyone is entitled to a minimal quantity of.
D)   A product that serves as an incentive to produce more output.E) C) and D)
F) All of the above

Question 2

The market mix of output and the optimal mix of output are always the same.

Accepted Answer

A) True 
 B)False

Question 3

The most desirable combination of output attainable with existing resources, technology, and social values is known as the

Accepted Answer

A)   Optimal mix of output.
B)   Efficient mix of output.
C)   Optimal mix of production.
D)   Efficient choice of production.E) A) and B)
F) None of the above

Question 4

Suppose that if your income is $20,000, your tax is $4,000, but if your income is $40,000, your tax is $8,000. Such a tax is

Accepted Answer

A)   Regressive.
B)   Progressive.
C)   Proportional.
D)   A merit tax.E) A) and D)
F) A) and C)

Question 5

A World View article titled "Secondhand Smoke Kills 600,000 People a Year: Study" claims what percentage of all deaths worldwide are caused by secondhand smoke?

Accepted Answer

A)   1 percent.
B)   2 percent.
C)   5 percent.
D)   None of the choices are correct.E) A) and B)
F) None of the above

Question 6

When market failure occurs, the role of government is to

Accepted Answer

A)   Eliminate markets.
B)   Push market outcomes closer to the ideal.
C)   Create an alternative to markets.
D)   Do nothing.E) B) and C)
F) C) and D)

Question 7

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

Accepted Answer

A)   Social Security payroll tax.
B)   A local sales tax.
C)   The federal income tax.
D)   An excise tax.E) A) and B)
F) C) and D)

Question 8

The free-rider problem

Accepted Answer

A)   Arises from the ability to exclude an individual from the benefits of someone else's purchase.
B)   Is a government failure resulting from consumption of private goods.
C)   Reflects the inability to exclude an individual from the benefits of someone else's purchase.
D)   Means that the market mechanism is the most efficient way to produce public goods.E) All of the above
F) A) and B)

Question 9

If Good X has social demand that is less than market demand, then Good X must be a

Accepted Answer

A)   Public good.
B)   Good with an external cost.
C)   Good with an external benefit.
D)   Good suffering from the free-rider problem.E) None of the above
F) All of the above

Question 10

Market failure leads to

Accepted Answer

A)   An equitable distribution of goods and services.
B)   Public goods being underproduced.
C)   The absence of externalities.
D)   Production possibilities.E) A) and B)
F) A) and C)

Question 11

The fastest-growing areas for state expenditures are

Accepted Answer

A)   Education and welfare.
B)   Sewage and trash service.
C)   Prisons and welfare.
D)   Transportation and public safety.E) B) and C)
F) A) and B)

Question 12

Governments usually build highways because it is difficult to exclude individuals who don't pay for the highways from using them. What type of market failure is involved?

Accepted Answer

A)   Inequity.
B)   Public goods.
C)   Externalities.
D)   Market power.E) A) and B)
F) A) and C)

Question 13

The market mechanism leads to underproduction of public goods because the supply of public goods is hidden.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a merit good?

Accepted Answer

A)   Local telephone service.
B)   Electricity.
C)   Health care.
D)   Automobiles.E) A) and B)
F) None of the above

Question 15

Which of the following properly ranks the size of tax revenues received by the federal government from highest to lowest?

Accepted Answer

A)   Excise taxes, Social Security payroll taxes, income taxes, and corporate taxes.
B)   Corporate taxes, Social Security payroll taxes, income taxes, and excise taxes.
C)   Income taxes, Social Security payroll taxes, corporate taxes, and excise taxes.
D)   Social Security payroll taxes, excise taxes, corporate taxes, and income taxes.E) None of the above
F) A) and C)

Question 16

Which of the following is a source of market failure?

Accepted Answer

A)   Private goods.
B)   Market power.
C)   Government intervention.
D)   None of the choices are correct.E) A) and D)
F) B) and C)

Question 17

State governments receive half of their tax revenue from property taxes.

Accepted Answer

A) True 
 B)False

Question 18

The term transfer payments refers to

Accepted Answer

A)   Federal income taxes.
B)   Money that is transferred between savings and checking accounts.
C)   Payments to individuals that are not in exchange for current goods and services being produced.
D)   Additional profits transferred to monopolies as a result of their market power.E) B) and C)
F) All of the above

Question 19

Sometimes the response to price signals, rather than the signals themselves, may be flawed.

Accepted Answer

A) True 
 B)False

Question 20

What is government failure, and how would it be demonstrated on a production possibilities curve?
Government failure occurs when government intervention fails to improve economic outcomes. The production possibilities curve represents the alternative combinations of output that are attainable given the available resources and technology. Government failure means that government intervention has moved the economy to a less optimal point on the production possibilities curve or to a point inside the curve.

Accepted Answer

Government failure occurs when governmen...

Exam 4: The Role of Government

The fastest-growing areas for state expenditures are

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The market mechanism leads to underproduction of public goods because the supply of public goods is hidden.

Correct Answer
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Correct Answer
Answered by ExamLex AI
Government failure occurs when governmen...
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The most desirable combination of output attainable with existing resources, technology, and social values is known as the

Correct Answer
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The term transfer payments refers to

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Sometimes the response to price signals, rather than the signals themselves, may be flawed.

Correct Answer
verified

If Good X has social demand that is less than market demand, then Good X must be a

Correct Answer
verified

Which of the following is a source of market failure?

Correct Answer
verified

Suppose that if your income is $20,000, your tax is $4,000, but if your income is $40,000, your tax is $8,000. Such a tax is

Correct Answer
verified

Which of the following is a merit good?

Correct Answer
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Governments usually build highways because it is difficult to exclude individuals who don't pay for the highways from using them. What type of market failure is involved?

Correct Answer
verified

State governments receive half of their tax revenue from property taxes.

Correct Answer
verified

A World View article titled "Secondhand Smoke Kills 600,000 People a Year: Study" claims what percentage of all deaths worldwide are caused by secondhand smoke?

Correct Answer
verified

When market failure occurs, the role of government is to

Correct Answer
verified

Market failure leads to

Correct Answer
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The free-rider problem

Correct Answer
verified

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

Correct Answer
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The market mix of output and the optimal mix of output are always the same.

Correct Answer
verified

A merit good is

Correct Answer
verified

Which of the following properly ranks the size of tax revenues received by the federal government from highest to lowest?

Correct Answer
verified

Exam 4: The Role of Government

The fastest-growing areas for state expenditures are

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The market mechanism leads to underproduction of public goods because the supply of public goods is hidden.

Correct AnswerverifiedShow Answer

Correct AnswerAnswered by ExamLex AIGovernment failure occurs when governmen...View AnswerShow Answer

The most desirable combination of output attainable with existing resources, technology, and social values is known as the

Correct AnswerverifiedShow Answer

The term transfer payments refers to

Correct AnswerverifiedShow Answer

Sometimes the response to price signals, rather than the signals themselves, may be flawed.

Correct AnswerverifiedShow Answer

If Good X has social demand that is less than market demand, then Good X must be a

Correct AnswerverifiedShow Answer

Which of the following is a source of market failure?

Correct AnswerverifiedShow Answer

Suppose that if your income is $20,000, your tax is $4,000, but if your income is $40,000, your tax is $8,000. Such a tax is

Correct AnswerverifiedShow Answer

Which of the following is a merit good?

Correct AnswerverifiedShow Answer

Governments usually build highways because it is difficult to exclude individuals who don't pay for the highways from using them. What type of market failure is involved?

Correct AnswerverifiedShow Answer

State governments receive half of their tax revenue from property taxes.

Correct AnswerverifiedShow Answer

A World View article titled "Secondhand Smoke Kills 600,000 People a Year: Study" claims what percentage of all deaths worldwide are caused by secondhand smoke?

Correct AnswerverifiedShow Answer

When market failure occurs, the role of government is to

Correct AnswerverifiedShow Answer

Market failure leads to

Correct AnswerverifiedShow Answer

The free-rider problem

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The market mix of output and the optimal mix of output are always the same.

Correct AnswerverifiedShow Answer

A merit good is

Correct AnswerverifiedShow Answer

Which of the following properly ranks the size of tax revenues received by the federal government from highest to lowest?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
Answered by ExamLex AI
Government failure occurs when governmen...
View Answer

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